Author of The Bitcoin Standard, Saifedean Ammous, believes that fiat is the central problem plaguing society. “The 20th century is just an enormous amount of wealth being taken away from people who produced it and being sent to the meat grinder of war. And this is what fiat does,” he told Cointelegraph.

“If you take that away, we get a lot less murder and death, and then we get a lot more prosperity, productivity and a lot more wealth.”

In his latest book, The Gold Standard, he explores this very concept. What if the civil, political and social upheavals of World War One never happened? What if a new, decentralized form of money took hold, soon after the war began in 1915?

In our timeline, the four-year war destroyed Europe, exacting a death toll that exceeded 40 million across 30 participant countries. The war sparked revolutions across Europe. By the time the dust settled, the imperial houses of Habsburg, Romanov and Hohenzollern ruled no more. The Ottoman Empire descended into a civil war.

The English class system was challenged, and women in the UK gained the vote. New, independent nations like Finland, Poland, Georgia, Lithuania, Latvia and Estonia emerged. Novel political movements like communism and fascism gained popularity amid the catastrophic economic fallout.

The central thesis of The Gold Standard is that these outcomes of the war were ultimately a result of the fiat banking system. Ammous imagined a world in 1915, just after the Great War broke out, where a decentralized, immutable system of value transfer with gold was invented.

How could it change the course of human history for the better?

Gold, planes and central banking

The Gold Standard begins by setting the political chessboard at the end of the Belle Epoque, the extended period of prosperous but armed peace in Europe from 1871 to 1915.

Ammous describes the political boundaries within Europe and the rise of central banks. Chiefly, he describes how the solidity of the traditional gold standard “had a major problem that prevented it from functioning optimally in its ideal form: the incessant extension of bank credit without corresponding savings.”

In Ammous’ account, a combination of imperial ambitions, poor decision making from politicians, and irresponsible monetary policies allowed the powers of Europe to sleepwalk into the First World War. 

In 1915, the alternate history starts with a real-life hero: French aviator Louis Blériot. In The Gold Standard, Blériot realizes the pernicious power that central banks pose to the world, and partners with the American Wright brothers to found the Blériot Transport Corporation (BTC). 

They create a fleet of ingenious planes that, piloted by early aviation pioneers of the time, deliver gold from point to point. 

“The automobile and aviation industries traded with one another across international borders without having to resort to central banks. As the war raged on and more restrictions were imposed on withdrawing gold, demand steadily increased. Old money became anxious about the banking system. They increasingly demanded that gold be kept on hand and wished to rely on BTC for trade. Most important, perhaps, was that BTC had freed people from having to turn in all their gold to the banks in response to their governments’ pleas.”

This eventually leads to a capital flight which, combined with other circumstances, emptied the belligerent countries’ central bank vaults of all their gold reserves. With countries increasingly unable to finance the war, generals begin to pull back their troops. By early 1915, the guns are silent, the trenches are empty, and peace breaks out in Europe. 

The end of the war is codified in the “Treaty of Geneva” and the establishment of the International Committee for Self-­Determination (ICSD).

The enduring peace, enabled by a worldwide, immutable gold standard, then leads to unprecedented prosperity in the 20th century. This leads to a massive appreciation in gold value, or “hypergoldenization.” 

The form of a governance-for-hire corporate government emerges:

“The tribal considerations of nationality, ethnicity, and religion became increasingly separated from government, and people pragmatically chose to live under the governments that provided them security and services at the lowest cost.”

Without central banks to finance them, and with a conflict resolution framework in the form of the ICSD, wars are far more difficult and expensive to wage. 

The prosperity of the gold standard has also eliminated some historical events, economic and natural phenomena that we take for granted, including the rise of socialism, World War II, depressions, climate change, “fiat food” and unemployment. 

The book concludes with an accounting of an average day in the life of the Smith family in London in this brave new world.

“Comfort is taken for granted, and prosperity is ordinary. Technology shortens chores, meat is plentiful and affordable, travel is fast, and energy is so abundant that they barely think about it.”

From gold bug to Bitcoin to the trenches

Ammous first became immersed in Austrian economics in 2007, “and by 2008 I would have pretty much called myself an Austrian,” he told Cointelegraph.

Initially, he was a gold bug. “I already had a good grasp of the problems of inflation, the problems of fiat. And I was hanging out on the parts of the internet where Austrian economics nerds discuss these things. At that point, it was a lot smaller than what it is now.”

It was here that he first came across Bitcoin in the context of “sound money” or “hard money.” He wasn’t sold on the concept until 2014, after reading about Bitcoin mining. Soon after, he wrote the best-selling book The Bitcoin Standard.

The Gold Standard, his latest, departs from his usual format by depicting a twist on modern history’s most pivotal event.

“I’ve always been so fascinated by World War I. It’s always been the most fascinating historical thing for me,” Saifedean Ammous said. “If you think about World War One, you’ll see World War Two is essentially just the continuation of the same war. But really, the turning point was World War One.”

The central thesis of the book is that the evils of the war, along with the concomitant social and political changes, were ultimately a result of the fiat banking system. Once rendered ineffective by “BTC,” the course of human history changes.

But creating a credible alternative history isn’t really easy.  Ammous said he wanted to make it “so that it isn’t just a pink unicorn” where “world peace breaks out.” He wanted it to be “tenable, believable, credible” that allows the reader to “think in an accurate way about the implications […] in a useful way and a more robust way.” 

Creating this new form of monetary transfers was necessary because “the world isn’t going to really change much. Not if there was no war. Then we’re going to continue in the same way.”

Alternative histories are tricky

Despite the clear depth of research that went into the book, some of the historical turns strain credulity. 

In the book, Blériot and the Wright brothers’ 1911 airplane prototype, the Lightning, was capable of reaching speeds of 280 km/h with a range of 1,400. This is an over threefold increase in airspeed from Blériot’s record-breaking crossing of the English Channel just two years prior, where he averaged around 80 km/h. 

The speed and range of the planes that comprise “BTC’s” fleet far outstrip anything that would be made until the mid-to-late 1930s, making them something of a Deus Ex Machina for the new monetary system.

In chapter 10, as the “BTC”-induced capital flight drains resources from governments to pay their armies, the trenches simply empty as soldiers peacefully desert and go home. History before WWI is riddled with examples of armies going without pay, but they are frequently accompanied by mutiny, looting, pillaging, and, in the more dramatic cases, the sacking of entire cities. 

As the generals empty the trenches, Ammous removes some of the belligerent leaders of the war from office. In the cases of Tsar Nicholas II and Kaiser Wilhelm II, this happens through murder. Nicholas II is shot by his cousin Grand Duke Nicholas Nikolaevich and replaced by his brother Grand Duke Michael Alexandrovich. The Kaiser is stabbed in the back by his son, the Crown Prince Wilhelm. 

Both of these resolve without so much as a word of protest. World history is absolutely littered with wars of succession after the murder or death of a monarch. It is difficult to imagine the lack of one here, on a continent just recently at war, with a mass of soldiers missing their pay. 

Furthermore, the extrapolations into the future are necessarily uncertain, as no one has a crystal ball. Still, some of them, like the idea that climate change would not happen, or that we would all eat more beef, seem fairly heterodox. 

Ultimately, the book is “a different way of imparting the fundamental lessons of my three other books,” per Ammous. He said that some people prefer to think in terms of “fiction, in terms of thought experiments, in terms of hypotheticals,” which was a different approach than his first two books.

WWI also provided a unique example, “because we need to know how the world went off the rails” and envision what could have been.

“If that money is kept, then people will save it, they will accumulate capital. Then the world becomes more capital abundant. We have more capital. Capital becomes cheaper. People are able to invest more. They’re able to save more. They’re able to grow more. And so you put all of these things together and then you have an amazing world and it’s just a very different world,” Ammous told Cointelegraph.

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