Recently had a viewer reach out to us with some questions on twitter so we thought it would make for a good blog post.
What drove you to create the site? What has been the most surprising outcome?
The inspiration for creating the website was born out of pragmatism. That is to say, the data was collected with the a priori assumption that abandoning the Bretton Woods agreement lent an unprecedented and unaccountable agency to nation states (particularly the United States thanks to the US dollar’s position as a global reserve currency) in their ability to expand money and credit.
The Austrian position upon which our a priori assumptions are based is as follows:
1. That expansion of money and credit sends artificial signals to the market which breed malinvestment leading to an ultimate deflationary credit & money contraction when the malinvestment liquidates(Austrian business cycle theory).
2. Nation States (and particularly the United States) have an unfair advantage over capital markets in their ability to unilaterally capture seigniorage through the issue of new currency while simultaneously debasing the real value of their debt and liabilities as the nominal supply of money increases.
3. Point 2 leads to a top down redistribution of productive capital accumulated by private industry to the public sector which is often redirected to frivolous and/or unprofitable ventures.
The pragmatic usefulness of the website (for me personally) was merely having the data all in one place where I could simply refer a person to the data to quickly and easily demonstrate the many downstream effects of fiscal and monetary expansion (as based on the Austrian positions I outlined above).
The idea to turn it into a meme rather than a financial blog (or something of that kind) was born out of a desire to foster a reaction of socratic self discovery in the viewer. It is far more important to me that the viewer walk away with the right question rather than with what I believe is the right answer…What the F*** happened in 1971?
Do you think the shift post-1971 is the result of cultural changes or policy changes? And do you have a hypothesis for which particular changes contributed?
I believe 1971 inflection across the many data series listed on our website is downstream of monetary policy. And I believe that monetary policy is downstream of fiscal policy. Of course, none of these data points exist in a vacuum and there are often other contributing factors that may contribute to the macroeconomic and societal trends observed in our data. I believe Richard Nixon’s closure of the gold redemption window in 1971 was the largest driving factor in the inflection points you can see in our data.
As I stated previously this is an a priori assumption, as we did not gather the data first and then form a hypothesis based on the correlations.
It is also important to realize that the data is intentionally curated to invoke a reaction of curiosity in the viewer, we go out of our way to only include data sets that demonstrate a marked inflection point around 1971.
Do you think it is possible to re-right these trends? If not, why? If so, how?
I do. However, this is not an easy question to answer. I think in order to revert these trends we are required to deal with the source of the problem which is the unsustainable, predatory fiscal policies and monetary policies of the 21st century nation state.
I believe this is achievable only by the free market taking back control of the cost of capital in society. Additionally, I believe it is necessary to correct the rampant systemic and systematic inefficiencies and parasitic imbalances in the monetary system which concentrate wealth and discourage the deferment of immediate consumption (aka saving for the future).
I believe these changes are achievable through an opt-in, distributed & open source free market technological network called Bitcoin. Bitcoin solves the problem of the trusted 3rd party required for final settlement in money & credit at scale.
