WBD658 Audio Transcription
1000 Years of Inflation with Rune Østgård
Release date: Monday 15th May
Note: the following is a transcription of my interview with Rune Østgård. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
Rune Østgård is the Author of ‘Fraudcoin: 1000 Years with Inflation as a Policy’. In this interview, we discuss inflation’s historical introduction and use as an exploitative tool by elites and how, in various phases of history (most recently, the early 20th century), inflation was not viewed as a required economic phenomenon. To Rune, there is no more important subject to understand than inflation.
“The people who worked as economists, who were against inflation, they were basically frozen out of the universities, etc. They, the politicians, wouldn’t listen to them.”
— Rune Østgård
Interview Transcription
Peter McCormack: Good morning, Rune.
Rune Østgård: Good morning.
Peter McCormack: How are you?
Rune Østgård: I'm fine. I'm great, actually.
Peter McCormack: Yeah?
Rune Østgård: Thanks. And you?
Peter McCormack: Yeah, I'm good, man, good. We've had a very good week here in Bedford.
Rune Østgård: I know.
Peter McCormack: You heard.
Rune Østgård: Yeah. Congratulations.
Peter McCormack: Thank you. We all had a few too many beers.
Rune Østgård: I can imagine, yes. I saw some pictures as well on Twitter.
Peter McCormack: Oh, you saw the celebrations?
Rune Østgård: I did yeah.
Peter McCormack: Yeah, so Danny here had a small hangover.
Danny Knowles: One of the worst hangovers I've ever had.
Peter McCormack: Oh, was it that bad?
Danny Knowles: I woke up this morning feeling so good.
Peter McCormack: Was it actually that bad?
Danny Knowles: Yeah, it was pretty bad.
Peter McCormack: Young Connor had a little nap in the car. I had a few too many, but I wasn't too bad. Anyway we were we were celebrating, but welcome to Bedford. You come under high recommendation from our mutual friend, sometimes foe for me, Hodlnaut. We've clashed and agreed on things, which I would think actually is a good basis for a friendship, but he comes under high recommendation from Hodlnaut. He got in touch and said, "You've got to talk to Rune".
Rune Østgård: Great, he's a nice guy so I really appreciate the recommendation, I must say. I haven't met him that many times but I've spoken to him a couple of times on the telephone, and, yeah.
Peter McCormack: Well you sound like him.
Rune Østgård: Oh, do I?
Peter McCormack: Yeah a little bit. Okay, so for people who won't know you, Rune, give a little bit about your background.
Rune Østgård: Okay, I'm 50 years old. I live in the --
Peter McCormack: No, you're not!
Rune Østgård: Yes, I am. I'm from Trøndelag and that's a region in Norway which is in the middle part of Norway. I live close to a small city called Steinkjer, where I work as a lawyer. So, I have quite a varied background. I've been working for the public sector and in the private sector. Now, I run my own law firm together with a colleague of mine, and I've been working also in the European Commission in Brussels. And actually when I walked from the hotel to your place today --
Peter McCormack: You walked here?
Rune Østgård: Yeah, and it reminded me a lot about Brussels actually. It's very flat, it's green, the houses, and that was a great period in my life actually, when I was living in Brussels for three years.
Peter McCormack: I'm trying to think of the way.
Rune Østgård: So I was very happy when I walked here this morning.
Peter McCormack: So let's talk about this book. So, 1,000 Years, Fraudcoin, show it up, show it up to the camera, 1,000 Years With Inflation as a Policy. Why did you decide to approach this as a subject for a book? You had a lot of experience, property rights, you've been a lawyer working in the European Commission, you decided to write a book; why inflation; why that subject?
Rune Østgård: First of all because it's the most important subject of them all.
Peter McCormack: Everywhere, or within economics?
Rune Østgård: I think in society.
Peter McCormack: Wow, that's a bold statement but I'm not going to disagree.
Rune Østgård: Because money is so important for society, for civilisation, and if you don't have sound money, if you have money that you can manipulate, then that has a very big impact on how society is and how it affects individuals as well of course. So, I consider it to be the most important subject.
Peter McCormack: Yeah, I can't disagree. I mean Danny yesterday interviewed a man by the name of Luke Gromen. Do you know him?
Rune Østgård: I've heard the name, yes.
Peter McCormack: Yeah, he's worth a follow, and we were talking about inflation. We were talking about the high levels of debt that the US government, UK government, European governments, governments around the world are saddled with; we have a sovereign debt crisis. And most economists I've spoken to have come to the conclusion there's two ways of ending this sovereign debt crisis. It's either a default, or you inflate it away, but the debt, you have to somehow remove the debt. I don't know what the inflation is in Norway but at the moment in the UK, what are we, 11%?
Danny Knowles: Yeah, I think it's 10.4%.
Peter McCormack: 10.4% and it's not come down, whereas the USA at least managed to knock it down a bit. Do you know what the Norway rate is? What have you got there?
Danny Knowles: I'm just having a look.
Rune Østgård: 6.5% I think --
Peter McCormack: Show off!
Rune Østgård: -- I think the numbers, the new numbers came yesterday I think.
Peter McCormack: And I don't know how much trust there is in the Norwegian Government. By the way, I've been to Norway and I think it's one of the most amazing countries in the world. Firstly, everything fucking works, everything works.
Rune Østgård: You haven't been there long enough then!
Peter McCormack: Well, I've been in the UK long enough. The trains are on time, everything's clean, the air is lovely, the women are beautiful. It's a great country and I'm going back. When are we going; June, July? Oslo Freedom Forum.
Rune Østgård: Yeah, it's in June I think.
Peter McCormack: Will you be there?
Rune Østgård: I hope so.
Peter McCormack: Yes I hope you are. What's the Norwegian rate?
Danny Knowles: 6.5%.
Peter McCormack: 6.5%, so 11% here, and I don't know how much trust you have in your government, but I know fundamentally when it's 11.2%, or whatever it is, that's the lowest they've been able to get it in the way they manipulate figures. I think inflation firstly is personal, so it depends on what you're buying, but your experience of inflation is a lot higher than 11%. So Luke said very casually, very casually, "Yeah, they could extend inflation 10% to 20% over 5, 10, 15 years, or they might just squeeze it all out in one go and probably have two or three years of over 100% inflation".
We were like, huh? He was like "Yeah", very casually he said, "this is highly likely", and he explained the case study of Israel when they did the same and he said it's still a flourishing economy, it's a nice place to visit. And I was thinking, that is going to have a catastrophic effect on many, many people.
Danny Knowles: And he said it's a tail risk, but it's possible, like it's within the realms of possibility.
Peter McCormack: He said we're definitely going to have inflation, and high inflation, and it's likely that we'll contract and expand numbers, but there's every chance we hit very high inflation. I worry with that about the catastrophic impact it has on hundreds of millions of people. So therefore, that's my long-winded way of saying, I can see why you think this is the most important subject of our time.
So, if someone new was listening, Rune, and they didn't understand what inflation is, because by the way, there's sometimes two ways of explaining inflation. Some people think price rises is inflation; it's not necessarily inflation. Price rises can come from inflation, but it's not inflation. But some people think price rises, just price rises themselves, are inflation. Should we explain in the most basic form possible, like I'm 5, what inflation is so people understand?
Rune Østgård: Okay, like you're 5?
Peter McCormack: Yeah, like I'm 5.
Rune Østgård: That's a challenge.
Peter McCormack: Well, you want to try being 5!
Rune Østgård: What I tried to do with my book was to avoid falling in the trap of having this discussion on semantics, you know, what inflation is. So I said that basically you have monetary inflation, which I define as an increase in the money supply, that you have more money in society; and then you have price inflation, which is a general increase in the prices and the price level. And then I said that there's a causality there, so you need to have an increase in the money supply in order to have a general price increase, the price inflation.
Peter McCormack: Sorry, just to interrupt, a general price increase would be, so for example, say Connor over there, he sells hats and suddenly he gets a lot of exposure and there's a lot of demand, he raises his prices. That's not a general increase in price; that's isolated based on performance. When you say general, you mean broad increase in the price of everything?
Rune Østgård: Yeah, and I don't limit it to consumer goods. Of course, it's real estate, it's stocks, everything. And of course, due to technological innovation, etc, some goods will fall in price while others of course will increase in price. But the basic rule is that you need a general increase in the supply of money in order to have a general increase in the prices. So, that's very important for people to understand. I think just to point out those basic facts, it's very important for normies, for ordinary people who didn't read a lot of economics; they need to understand this fact, it's the most important issue.
Peter McCormack: You see, when I was growing up, I would always hear about inflation on the news, the target inflation rate, what the rate is and I just grew up thinking inflation was one of those things that's a natural part of a growing economy, and if we were above inflation, that would be not necessarily a bad thing, but if we would go below inflation rates, if we went under 2%, that's dangerous, and so we had to try and get back to 2%. So, I was perhaps gaslighted into believing inflation was a good part of a healthy economy; that's not true, is it?
Rune Østgård: No, no, it's not true at all and it has been a scam all the time. If you go back, I would say let's say 120 years back, to the year 1900 or something like that, if an economist said that it's healthy for the economy to have price inflation, people would have been looking at him and, "Why? Why is that healthy?" And then just 30 years later, beginning actually in the 1920s and 1930s, that was what economists started to say, that you need some inflation to grease the wheels of the economy.
I had to write a little bit about that transition as well in my book. I have a chapter on the history of economics, how it developed, and I explained to people that it started with the difficulties they saw actually also here in England with trying to negotiate the salaries with the workers when the prices dropped due to a stable money supply, prices dropped over time and you had to negotiate wages for the workers, and they were very reluctant with respect to accepting a lower nominal wage which might have been a higher real wage because the money was more valuable.
So in order to overcome those difficulties, Keynes, he said that it's easier to negotiate and have a necessary transition in the economy if we have some money, monetary inflation. It sort of greases the wheels, the workers they accept real wage decreases because they believe that they earn more money, and in nominal terms they did of course. So this was sort of the key thing within economics theory that won through and of course it was very popular with the politicians. They would like to have more monetary inflation because the state was one of the first users of the newly created money. So it was a very popular thing with respect to getting the support from science; the professors started to say that inflation is good for the economy. The rest of the story is just tragic.
Also for the academia, the people who worked as economists, who were against inflation, they were basically frozen out of the universities, etc, the politicians wouldn't listen to them. They became what we call in Norwegian, a pariakaste.
Peter McCormack: Pariah?
Rune Østgård: Pariah, yes. So what happened in the 1920s and 1930s within academia, it was very bad for society.
Peter McCormack: It's a really interesting part of history that I really want to now read about, because when you talked about the workers being offered a nominal increase in their money but knowing full well that that meant to a lower purchasing power, it is the same scam that came up in the conversation with how the state is going to default on their massive debts, in that by driving up massive inflation, they know that the bondholders will get their nominal value, but the purchasing power of that nominal value will crash heavily. And it is a giant scam, it is theft, if you ask me.
Rune Østgård: Definitely.
Peter McCormack: And I constantly think about how do I communicate -- one of the things I think about, Rune, is how do I communicate this to people? When I'm trying to talk to my friends, my son, my father, my brother, trying to tell them these stories, because there's so many stories like this that surround Bitcoin, I sometimes feel like I'm coming across as a nutter; I do.
Rune Østgård: I've heard you say that on several episodes on this podcast.
Peter McCormack: Yeah, I feel like they think I'm crazy! My son's probably like, "Why's my dad the one who's always the nutty conspiracy one?" But I know it's truth, I know it's a giant scam, I know the government is stealing from us, we know they're closest to the spigot, we know they use that spigot to win them votes, we know they make promises they can't deliver and compound the issues, and we're seeing it right now. Almost everything I've said to you for the last five, six years making the show to my friends, it's now coming true and they're like, "Yeah, Pete, you're still a nutter"!
Rune Østgård: You're branded.
Peter McCormack: Branded a nutter.
Rune Østgård: Yeah.
Peter McCormack: How do you package this up?
Rune Østgård: And you have the double challenge. You talk about inflation as a problem and explain to them how bad it is for society and that the government is a scam basically, or more or less, and then you also try to explain to people that Bitcoin is the solution; it's a big challenge!
Peter McCormack: "What's the fix then Pete?" "Well, so there's this mysterious guy called Satoshi, nobody knows who he is, he's basically made this money that's on the internet. We call it magical internet money and basically you buy that and that's the solution". Yeah, I sound fucking crazy! So, what was the reception? You must have family, because family and friends will take a look at your stuff because they're your family. Did you open people's eyes with this; did you Fraudcoin, orange pill, fraud pill people; did you fraud pill people?!
Rune Østgård: Yeah, I think so actually. Let's begin with my partner. She trusts the governments, the authorities, she's a conservative-minded kind of woman, and she didn't know that I was writing this book. I wrote it in three, four months' period last year.
Peter McCormack: In secret?
Rune Østgård: Yeah. I couldn't tell her because I knew that she would be mad at me for writing another book. So, I think it was two weeks before I was going to launch the book. She asked me, "Rune, are you writing a book again?" And then I had to admit, "Yes", and of course I understand that she was mad at me, and that wasn't a good start in terms of trying to get her to read this book!
Peter McCormack: How many books have you written?
Rune Østgård: I've written two books.
Peter McCormack: I didn't know you wrote -- what was the one before this?
Rune Østgård: It was about quick clay.
Peter McCormack: Quick clay; what is quick clay?
Rune Østgård: Well, quick clay, you know what clay is in the soil. So, quick clay is something we have a lot of in Norway. It's a type of clay that collapses, so it goes from a solid sort of soil and suddenly it just becomes like water.
Peter McCormack: Like quicksand?
Rune Østgård: It's almost like quicksand, yes.
Peter McCormack: Okay, and there's enough to get a whole book out of this; you wrote a whole book on quick clay?
Rune Østgård: Yeah, it's much bigger than this one actually.
Peter McCormack: I'm interested to know how much you can write about quick clay!
Rune Østgård: Well, quite a lot actually.
Peter McCormack: Yeah, so why was she so opposed to you writing another book then?
Rune Østgård: I spent a whole lot of time writing the first book. But to get back to your question on orange pilling or fraud pilling, people around me, I took her to a conference, it was a month ago. It was a gold conference, but I was invited to speak about inflation, and she heard my presentation and many other presentations as well. And she became convinced that the monetary system we have is not good at all, and she began I think to appreciate the work that I have done.
Peter McCormack: Okay, great. So, did she apologise?
Rune Østgård: If she apologised, well she didn't, but I forgive her for being mad at me!
Peter McCormack: So, what do you think is it that resonated with her then?
Rune Østgård: What I think is that the way I explain inflation in my book is by looking backwards, looking at the history, because I go all the way back to the Viking Age. And my region, Trøndelag, in the middle part of Norway as I told you, it's got a rich history. And if we go back to before 1050 of the Christ, then we had what we call monetary freedom, or what I call monetary freedom at least. So people could use whichever money they liked best, they could use silver coins from the UK, they could use gold coins from the Arab countries, and they preferred to use coins with the highest possible amount of valuable metals, namely silver and gold.
This was special because in most other places, you already had introduced inflation as a policy, where the kings took control of the coinage and they debased the coins over time, and just defrauded their people. So what I tried to explain was the transition from this kind of free society and to a society which was plagued by inflation in a short period of, yeah, it took just 16 years before tragedy occurred. So, it was introduced in 1050 and in 1066, it became a catastrophe because --
Peter McCormack: What happened?
Rune Østgård: What happened was that the king, his name is Harald Hardrada, he introduced inflation in Norway in 1050 after killing one of the local big shots in Trøndelag. I think it was, he reduced the silver content from 90% to 33% within 16 years, and basically what he did then was probably that he tripled almost the money supply in 16 years, and he enriched himself a lot in doing that, probably raised taxes as well at the same time, and he decided that he wanted to go to England and conquer England. So, he took 7,000 to 9,000 men with him to England and they were surprised by King Harold of England and slaughtered in the Battle of Stamford Bridge. And that was actually the end of the Viking Age that marked the end of it all.
So it's so dramatic, you know, that our story of going from monetary freedom to inflation to catastrophe and the end of the Viking Age, and a very swift transition in respect of culture and politics, etc, and this is what I think resonates with people. They can feel what inflation is when they read my book and hear about this story.
Peter McCormack: I think a lot of people are feeling it now, but I don't think they truly understand what's happening. I've spoken to a lot of people about it. Some do, some understand, some are believing what they've been told that, "Oh, you're experiencing high inflation because of Putin attacking Ukraine", which obviously is an excuse. But people are experiencing it at the moment, people are seeing prices go up, and not enough people fully understand why it's happening, how wasteful the government is.
We had a guy on here called Dan Tubb recently, he's been on a couple of times, and we've talked about the government receipts of £1 trillion a year, we've talked about their expenditure being £1.1 trillion, so they're increasing the debt by £100 million a year. We've talked about increasing the money supply that's come with that, and we've talked about the massive inflation we've had, we've talked it through. But getting this message across to a larger, wider group of people still proves really difficult.
Rune Østgård: I think it's difficult for them to see the big picture, and that's the key phrase in my book. It's one of the opening pages, "Let's look at the big picture", because there are so many numbers and people, they don't relate to the word "trillion". They don't understand what a billion is almost, so we have to explain it to them using stories. And my method is to make use of stories with real people, both in terms of villains and heroes, and also talking a little bit about what kind of personalities the economists were, in order to make them real people, not just someone from academia or some obscure economist. So when you give the story flesh and bones, it's possible for people to understand and to relate to this.
So what I did was, I started with the Viking Age and showed them how the transition was, and then I followed it all the way up to our day and age, and explained how the monetary policy affects our daily lives, using happenings that people knew of in our age that they could relate to, you know, the collapse of the economy in the 1980s and early 1990s for instance, and also the Great Financial Crisis. So, by beginning with the very beginning and ending up where we are today in the simplest possible manner, using real people and real stories, then it becomes possible for them to understand, and very many readers appreciate that, they tell me.
Peter McCormack: How much did you cover the rise of central banks and their role?
Rune Østgård: Yeah, that's an interesting question, because I hear some people they say that it started in the UK with the Bank of England. But the first central bank was the Swedish bank. It was called Riksens Ständers Bank, and it started operating in 1668. So I write a little bit about the bank that was before this central bank, the Swedish bank which was before, and then I write about how basically it facilitated all the wars that the Swedish king was involved with afterwards in the beginning of the 1800s.
So, it's a very interesting story of course and what happened was that this innovation in monetary policy, it spread throughout Europe like a wildfire, you know. And I think the reason why it did so was because they saw what the little Swedish country with the mad warring king, what he could do in terms of waging wars against the giants like Russia and many other countries. And he made use of, very effective use of, the central bank, so it spread to all the other countries and the kings wanted to have this and, yeah, it was a kind of a weapon.
Peter McCormack: And how did the central banks evolve; what was the original purpose of the Swedish central bank?
Rune Østgård: I think the original purpose was, it was the Swedish nobility who started up this bank, because they watched how the previous bank performed in terms of redistributing wealth by using paper bills and inflation with paper money. But the Swedish king was quick to just take control of the bank because he wanted to have the revenues for himself, and to borrow money, wage wars, and it's quite simple actually. It was a tool.
Peter McCormack: So, are you a proponent yourself now of free banking, going back to an era of free banking?
Rune Østgård: Yeah, it's much better than the coordinated banking by using a central bank, of course. But I think if we look a bit in the future, if Bitcoin succeeds for instance, I don't see a very big role for the banks anymore. You know more about that perhaps than I do.
Peter McCormack: Well, Bitcoin is a free bank.
Rune Østgård: Yeah, sort of, or a non-bank.
Peter McCormack: Well, I think of it as free banking in that with free banking, you have private institutions issuing their banknotes and you have to build certain trust around those companies, but they're allowed to fail, and if they fail, you deal with the consequences of that failure. Bitcoin's kind of the same in that there's no bailout, for me; but to me, it's better than free banking because with banks, I have to trust them as a custodian, I have to trust that they have the gold within their vaults to back their currency, I have to trust that they have the gold that backs up their banknotes, and if they fail I have to suffer the consequences because there's no bailout.
With Bitcoin, again there's no bailout. I can choose to trust a custodian or I can custody myself, but there's no bailout, and that to me is the new era of free banking which evolves beyond gold, in that you can custody yourself now, you don't have to rely on -- I mean, some people may choose to use custodians, I know people are like, "Not your keys, not your Bitcoin"; I think there's going to be people who are going to rely on custodians, and again that's just a different trust model. But for me, it's the free-banking errors; there's no bailouts for Bitcoin. And I take that risk, Danny takes that risk, you take that risk, we all take that risk. We all want that risk, yet they're trying to choke us out anyway.
Rune Østgård: Yeah, it's a big threat to the system that we have today. It's the biggest threat they have had ever, so I understand that they are fighting.
Peter McCormack: So have you warmed to Bitcoin quite a bit?
Rune Østgård: Yeah, definitely, of course. And although I don't write that much about Bitcoin in my book, I have a couple of pages covering cryptocurrencies and Bitcoin. And luckily, I had learned enough to separate between the two. And my conclusion, when I had studied it while I was writing the book, was that perhaps the most important thing with Bitcoin was the community itself that may be able to rediscover the value of monetary freedom. And I didn't develop that idea a whole lot, but I acknowledge that people are beginning to understand what the monetary system is now, much thanks to the Bitcoin community, and that's very, very valuable. I was kind of sceptical, a little bit sceptical, I must confess. It seemed to me at the moment when I wrote the book that it was a bit cultish.
Peter McCormack: Well, it is a little bit.
Rune Østgård: It might be in some Bitcoin communities. But so, my fear was that people thought that it would be enough just to get the success with Bitcoin, that it could replace the fiat money, and then we could all relax and everything was good. And, what if they didn't discover the value of all the importance of monetary freedom on their way? Then, it became a worshipping of technology without understanding what it really solved, what it really gave to society, and that's something that I'm trying to develop further now, because I'm writing a new book at the moment.
Peter McCormack: Does she know you're writing?
Rune Østgård: Yes, she does.
Peter McCormack: Is she mad at you?
Rune Østgård: No, she accepts it at least! And the book is about Bitcoin.
Peter McCormack: Come on!
Rune Østgård: Yeah, it's called Arrow of Truth. And here, I try to explain how important Bitcoin is in terms of people rediscovering the value of monetary freedom. I think we should be fatalistic in terms of trying to think that Bitcoin fixes everything, it can fix a lot, but suddenly something happens perhaps with our belief system or something like that, perhaps it might be destroyed by someone, a future king, you don't know. And what if we don't remember then what Bitcoin really sold for us? That would be a tragedy. And it's so important to remind ourselves about what Bitcoin actually does for society.
Peter McCormack: Yeah, it's interesting you say that about Bitcoin being used to teach people about monetary freedom, in that a lot of conversations I've had recently, I've talked about this on the podcast, I've gone beyond trying to explain to people why you should buy Bitcoin, why you should invest in Bitcoin. I just say, we even have on the Football Club, we have an article which is Why you Should Not Buy Bitcoin and it says, "There's never a perfect time to buy Bitcoin, but there's always a perfect time to learn about it".
I'm always trying to say that even if you don't care about this, even if you believe the FUD and you think it's a scam, or you think it's used by drug dealers and terrorists, whatever bullshit you believe, you should just go and learn about it, because it will send you down this rabbit hole of not only learning about the technology and decentralisation, but then you end up coming up against understanding the history of money, or the history of government and inflation, or the history of all these different parts of monetary and political history, which open your eyes into a way where you basically end up becoming a nutter like I am! But you end up learning about all these things, you go down these various rabbit holes, and I think that is useful for anyone even if they don't want to buy Bitcoin.
But I know very few people who've done a deep amount of research into Bitcoin have come out and said, "Yeah, no, I'm not buying it. Yeah, we're wrong". Most people you tend to see, I think, top-level rejection. And that's why I think it's really important to get people to go down the rabbit hole and learn about this.
Rune Østgård: Yeah, you have many inroads, so to speak. Bitcoin is very interesting for many people who are from the computer community and also for economists, I would imagine, and also those who are interested in political science and many other social sciences. So, I think it's very attractive as a subject and it's beginning to become also a bit of a sexy subject. That's my feeling, that people are a little bit more open to learn about it. They are getting curious about what Bitcoin actually is and why people promote Bitcoin, etc. So, I think we're quite early, but it's very interesting times and we can learn a lot about the process that we are working with now, I think. It's very interesting.
Peter McCormack: Shifting to a world of monetary freedom would be quite the shift for some people who've become used to governments bailing out anyone or any situation, whether it's bailing out the banks in the 2008 Financial Crisis, or whether it's bailing out homeowners who can't afford to pay their energy bills and given an energy, what would you call it? They gave UBI for energy, wasn't it, in this country?
Danny Knowles: Yeah, it was just like a rebate, wasn't it?
Peter McCormack: Yeah, or whether it's bailing out people who hold bank accounts in the US through the FDIC when a bank goes bust. People are used to government fixing their problems and I think it's because government naturally thinks, "Well, if we don't fix that problem, we'll get voted out". So it's like this organic thing, this bureaucracy, that naturally will grow because they constantly have to promise things. To flip to a world where the government's like, "We're not doing this for you. If your bank goes bust, it's your money lost and you have to be responsible", I guess it's a nationwide, "Not your keys, not your Bitcoin". I think that's a massive shift for people.
Rune Østgård: Definitely. I tried to sort of collect my thoughts about this this morning and started to write down a few words about belief systems and monetary systems because once more, if we trace, we go back in history, and look at what kind of belief system we had at the time when inflation was introduced in my area, in Trøndelag in Norway, then what I see was that Christianisation came at the very same time as the introduction of inflation. So it transformed our society from a totally decentralised society also in a spiritual sense because they worshipped, you know, Thor and Odin and many other gods that we don't know anything about today, and the worshipping, it was something which took place on each and every farm, they didn't go to the church. When you got Christianisation, people had to go to the church and the king was sort of the God's representative, the highest representative in each country, and that changed the belief system at the same time as they got used to having a currency, a type of money which was also controlled by the state.
If you jump to the 20th century, you see that there is a paradigm shift in 1914, when basically inflation as a policy took off. Before that, the government was sort of non-existing, so to speak, in people's lives. In Norway in 1900, the public sector spent 6% of GDP. And then what happened was that you saw an enormous growth of the state. So, what I think happened was that the state sort of replaced the Christian God. And the more inflation you got, the more also focus was shifting towards consumerism and that was sort of the second God that started to be worshipped in our society, I think. So that's a paradigm shift in terms of belief systems.
But now after the pandemic, I think people start to realise that we can't trust the state any more, not all people, but a sufficiently large number of people, they start to distrust the state; and also, they realise that we have all this stuff in our homes, we don't use a lot of it, it cost a lot of money to buy it and now it's worthless for us. So I think consumerism also is something that we are about to leave more or less; it's beginning at least now. And so then the question is what kind of belief system will this be replaced with? That's an interesting topic.
What I have started to develop in my mind is that I think the basic need that we have is safety, and there are different ways that society can provide safety to us as individuals. And my feeling is that people will begin to understand that safety is what something my local community can provide me with. And you start to find the way back to your family and neighbours and the local community, that you work together much more than we used to do previously.
Peter McCormack: So almost coming full circle?
Rune Østgård: Almost coming full circle, yes. In our history, it's a 1000-year of full circle.
Peter McCormack: Wow, yeah.
Rune Østgård: So that's my impression that we are gradually going back to that state, you might say, that situation.
Peter McCormack: Is that covered in the new book?
Rune Østgård: It's not very much covered in my new book, but I write a little bit about it, yes. I write a little bit about how religion affected the introduction of monetary policies.
Peter McCormack: So do you believe though that Bitcoin will play a role in that, and actually do you know what, just thinking about it, because you said people believed in their local gods and they believed in Christianity and then they believed in the state. Is Bitcoin itself, do you think, for some people the next thing they believe in, and that's maybe why it is a little bit cultish, because these aren't religious people, they aren't people who believe in that, they need to believe in something. A lot of people need to believe in something, attach themselves to something, and so this idea of this peaceful revolution through Bitcoin. Do you think that has become a belief system, and that's why people are a bit cautious?
Rune Østgård: That's a good belief system.
Peter McCormack: If we're right.
Rune Østgård: If we're right, yeah. But I think it's important to believe it nonetheless, although we might not be right because it basically shows us some values that are important. And if we stick to those values, even if Bitcoin doesn't help us with the solution, we have been reminded of some important things that might help us nonetheless. So that's my view of it.
Peter McCormack: So what do you think the next 10 to 20 years look like? Do you think we have a breakdown of the state, a fracturing of the state, World War, nuclear apocalypse, zombies?!
Rune Østgård: No I don't think it'll break down, but it will gradually fizzle out, perhaps not within the first ten years, but I think we see a peak state these days.
Danny Knowles: Yeah, peak centralisation.
Peter McCormack: Have you listened to my interview with Mark Moss?
Rune Østgård: No.
Peter McCormack: I think you would enjoy this one.
Rune Østgård: Okay.
Peter McCormack: So, he talks about society going from swings from centralisation to decentralisation, and his belief is that at the moment we are essentially at peak centralisation. But he talks about different cycles, so you have technology cycles, political cycles, is it monetary cycles?
Danny Knowles: Yeah. I can't actually remember.
Peter McCormack: There's three of them, but they're on different timescales. One on 80 years, one about every 250 years, and the other one's, I don't know, another one. He said they've all come to alignment. So we have peak centralisation at a time where we have Bitcoin. And so he thinks we're about to see the swing back to decentralisation because we always swing over, there's always an over adjustment.
Danny Knowles: It's the 250-year political cycle, 50-year technological cycle and the 80-year financial cycle.
Peter McCormack: Yeah, there you go, and he said they're all coming together at once. Mark Moss is an interesting guy. Is there anything I've not asked you about yet that you wish I had or wish we'd covered?
Rune Østgård: Well, I think we have had a great discussion so no, I don't know. Do you have anything more you want to ask me about?
Peter McCormack: Well, I'm more interested in your new book because there's a lot of Bitcoin books. I want to know what you're doing that's different, what you're going to write about that's different, because the thing is sometimes you pick up a Bitcoin book, you read it and you're like, "You're just explaining the same thing another way". I'm interested to see what you're doing different, from quick clay to inflation to Bitcoin; that's quite the journey!
Rune Østgård: Yeah, that's quite the journey, that's correct! First of all, I must say that I'm doing this book together with a bitcoiner I've met. His name is Mattis Storhaug, and he's a graphic designer, he's a great guy. And we are two creative souls working very well together, so that's very important for me to say. He provides a lot of illustrations, I provide a lot of storytelling, which makes it sort of interesting to learn about Bitcoin. And surprise, surprise, I go back to the Viking Age again.
The reason why I'm doing this is because once you look at the social and political architecture which we had in Tøndelag some 1,000 years ago, then you understand why we could have a monetary freedom; what was the sort of necessary social institutions, the legal institutions, etc. And the interesting thing is, once you compare those social and political and legal institutions with the architecture of Bitcoin, you see so many parallels. It's almost mind-blowing actually. I don't want to talk too much about that now, I just hope that people will read the book and look into it. It's very interesting.
Peter McCormack: Wow. So tell people how they can find your current book, follow you, find out about your next book, when it comes out.
Rune Østgård: Okay. You can follow me on Twitter of course, you'll get a whole lot of information. I do quite a lot of writing there, and I also have a Substack account, so you'll find me there as well. And me and Mattis, we decided to create a new company together, and it's called Undoqo, and you'll find us on the internet, undoqo.com and the meaning of this word is actually the core, the essence. So yeah, you can find us there. You will find the new book there and also the Fraudcoin book.
Peter McCormack: Well, thank you for coming over, thank you for having this conversation with us. I think we'll give Hodlnaut a nod and say it was worth doing and good luck with the new book, I look forward to hearing about it.
Rune Østgård: Thank you, thank you for having me.
