Rune Østgård | Fraudcoin – 1000 Years with Inflation as a Policy | Part 2

In the second episode of this two-part series, we welcome back Rune Østgård, a lawyer with a deep passion for monetary history and the author of "Fraudcoin: A Thousand Years with Inflation as a Policy" for a deeper dive into the nefarious world of monetary policy and inflation. Rune's explains the historical and ongoing manipulation of money supply by governments and central banks and sheds light on the often-overlooked roots of economic inequality.

We explore the stark reality of how inflation has been weaponized throughout history, from Lenin and Stalin's Soviet Union to the deceptive stability of the gold standard. We unravel the intricate web of policies that not only create economic problems but also mask their true origins, leaving citizens to bear the brunt of these manipulations.

Rune also offers tangible solutions for individuals and communities to reclaim monetary freedom by using gold, silver, and bitcoin to foster cooperation within local communities. Rune lays out strategies for building resilience against the volatile tides of inflationary policy.

If you've ever wondered about the true cost of inflation and who benefits from the manipulation of money supply, this episode is an eye-opener. Don't miss out on Rune's insights and the historical context that could change the way you view your money and investments.

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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Chloe: Stocks for beginners. Phil Muscatello and Finpods are authorized reps of Moneysherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

Rune: It's sort of a trade between the super wealthy, uh, and the politicians. This is how they party. They do this all the time. And as long as the people don't understand the process, then it can go on and on for generations. The worst thing is blame the people for the price inflation, when the government and the central bank and the banks are the sole source of price inflation because they have manipulated the money supply. So it's an evil thing to do towards your bolt or towards your citizens. And when you combine that with sort of saying that we have the recipe for how to m mitigate this problem with price inflation, that you have created subjects. So they said, for instance, we can put a ceiling on the prices of bread and also on the lease on, um, apartments, et cetera, to make it better for people. So they create the problem first, then they pretend that they can solve the problem by introducing new policy measures, which only makes it even worse for people.

Phil: Hi, and welcome back to stocks for beginners. I'm Phil Muscatello. We're welcoming back Rune Ostgard. Trying to get the pronunciation there correctly, Roon, because there's so many questions that I've got coming out of this book, and I realized that in the 40 minutes I allot to a usual episode that wasn't enough to cover all the questions. So, uh, we're coming back for a second run to find out more about the history of monetary policy and how we've all been hoodwinked as citizens. Aven.

Rune: Yeah, I love this topic. I can talk for hours and days. So that's probably why we exceeded the 40 minutes mark, what became the first episode. So, yeah, just move forward with your questions and I'll try to be a little bit more brief in my answers this time.

Phil: No, it's not about brevity. It's about how interested we are in this. Now, in the book, it goes through so many periods in history where monetary policy has been implemented that has been basically a way of taking money away from ordinary citizens. And this is in no particular order but the russian revolution. Lenin and Stalin absolutely understood these concepts of money supply, didn't they? How were they able to use it to take away money from the know?

Rune: It's one of these basic tenets in Marx. Uh, what's the book called again? The communist manifesto.

Phil: Yeah, communist manifesto and Dus capital.

Rune: Yes. So he says that it's, uh, absolutely necessary to take control of the banking sector and to control the money supply. And that's also what Lenin did in 1917. They just pumped up the money supply to such an extreme level. So they created hyperinflation. And by doing this, they could extract the wealth from the bourgeois, as they call it. And, um, it facilitated for, of course, it became much easier for them to take over the economy and to rule the people. But the problem also was that it created so much hardship, so it became a disaster in terms of availability of food and clothes and everything. Hyperinflation is hell on earth. And, um, the interesting part is that when the Soviet Union ended in 1991, the same thing happened again, that they were thrown out in hyperinflation. And that facilitated the, uh, transition to the oligopologist, what do you call it?

Phil: Oligolopists. Even I'm finding it hard to say.

Rune: Yeah, it facilitated a new robbery with these barons that came in, took over the oil and all the other resources, the factories, et cetera. It was pure chaos in the beginning of the 1990s in Russia because of this hyperinflation. So it's a very sort of potent weapon. If you want to throw over a government or just end the existing system. Uh, it's awful, but it's being used over and over again all over the world.

Phil: So, uh, many people will remember that many currencies for quite a while were under what's called the gold standard, where there was actual backing to the currencies with the amount of gold that were held in Fort Knox in the United States, for example. Describe to us how that started, how it worked, and why it didn't really work in the end.

Gold standard was most likely introduced to facilitate international coordination of money manipulation

Rune: So now we come to a part of my book where when I was about to launch the book, I finished sort of the last parts of the book. I tried to sum it all up for me and try to make sense of this gold standard policy, which came about as an international agreement in the 1870s. And, um, what I concluded was that it was most likely introduced in order to facilitate international coordination of the manipulation of the money supply. So it facilitated a much higher degree of coordination of the monetary policy. And after I wrote the book, and I've written two more books, one just came out recently now, and I'm also writing a book on bitcoin, which, uh, will come in March, I have realized that this probably was a reaction to the spread of monetary freedom in Argentina and the United States. Because what happened in Argentina and United States in the beginning of the 19th, uh, century, when they introduced monetary freedom, which we talked about in the first episode, the right to use the money you like best, was that exact same thing happened then as happened in the Netherlands during the golden age, when they reintroduced monetary freedom. So you saw an enormous capital flight from Europe, where every country in Europe was plagued by these kings and their government's manipulation of the money supply, because they held firmly onto this monopoly in money production with central banks, which had been introduced a little bit earlier. So what they must have seen is that there was an enormous capital flight and also all the talent, all the people that went from Europe and to Argentina and to United States. So I think that, uh, this was the setting up of the gold standard, which facilitated global coordination of the monetary policy. That probably was a measure to stem the tide. Is that an expression? Isn't it, to sort of avoid the English? Very well, yeah, to avoid the enormous outflow of capital and people from Europe and to the other. And, um, if you investigate the amount of money that was created, for instance, in United States dollars towards the end of the 19th century, it was supposed to be backed sort of one, two, one, a certain number of dollars and a certain grams of gold, or ounces of gold. But what happened was that they increased the money supply nonetheless. So in between 1880 and 1895, I think they increased the money supply by 5%, on average per year. A little bit less than that, 4.8 or something like that, in the United States. And I think they did very much the same in the european countries. So they inflated the money supply while they pretended that they didn't do it, because they had this gold standard, which said that they shouldn't do it. So the first gold standard, which was introduced internationally in the 1870s, didn't stop them from inflating the money supply. On the contrary, it made it possible for them to do it in tandem all over the world. And we have had two different types of international gold standards afterwards. And, um, basically, these gold standards did nothing in terms of putting any brakes on the money creation. Especially goldbergs, I think, should be a little bit many, at least many of them. They should reassess the success that they have been talking about, sort of that the gold standard was a, uh, success because it didn't facilitate inflation and the prices were stable. So, no, I think they have to analyze that from a different angle. That's my view, at least, because what.

Phil: Often happens with this situation where inflation gets out of control and what's happened through history, as you describe in the book, is that eventually you come to a point where people start going to the bank and want to withdraw their funds in some form or another and the bank can't do it. When everyone turns up the bank en masse and says I want my money out right now, there's just no way to do it.

Rune: That's the drawback. Probably feels nice when you can issue new notes to the people without having full reserve backing. All these notes and everybody is happy, the customer is happy, the people working in the bank, they are happy and everybody happy. And then suddenly some crisis appear and people line up outside the bank and then the bank telephone call to the central bank and the central bank calls the Ministry of Finance and they agree that they can suspend the gold standard or know and people have to go back and watch their savings burn. It happens over and over again, unfortunately, and hopefully since I've written this book not for economists but for the average man and woman in the street, ordinary people who shouldn't need any background at all in order to understand what inflation is all about. When they have read my book, my hope is that it can be at least help people to protect themselves and perhaps over time it can also improve policies if people read the book. I'm not alone about loan when it comes to write books like these, you find several these days, but they are often a little bit more complicated to read than my book. At least that's my impression.

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David Frum: It's difficult to make people understand inflation

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Phil: Well, we should just remind listeners at this point that now that we're in the second episode, that the book is fraud. Coin a thousand years with inflation as a policy. And I highly recommend it because, as you say, it really does describe the process. And what we don't really realize, and part of this as well, and this is for me, that I don't quite understand, is many people want to talk about, and especially on the left of politics, they want to talk about inequality. And so much of inequality seems to come from the process of inflation. And the solutions that the left look for, of course, is government intervention, that government can fix these problems, whereas the government is the problem. It seems to be in the first instance, and we just seen over the last ten or so years, or, uh, we've just seen over the last two or three years, when inflation has risen, how much asset prices around the world have gone up, whether it's property or the stock market. And inflation seems to create a process where the rich just keep on getting richer. And it's not something that governments can do anything about apart from restraining themselves.

Rune: Yeah. So what happens is that you get an ever increasing centralization, both of economic wealth and political power, that goes hand in hand. So the politicians, it's sort of a trade between the super wealthy and the politicians. This is how they party. They do this all the time. And, uh, as long as the people don't understand the process, then it can go on and on for generations. I think as we talked a little bit about in the first episode, the worst thing is blame the people for the price inflation, when the government and the central bank and the banks are the sole source of price inflation because they have, uh, manipulated the money supply. So it's an evil thing to do towards your voter, towards your citizens. And when you combine that with sort of saying that we have the recipe for how to mitigate this problem with price inflation, that you have created subjects. So they said, for instance, we can put a ceiling on the prices of bread and also on the lease on, um, apartments, et cetera, to make it better for people. So they create the problem first, then they pretend that they can solve the problem by introducing new policy measures, which only makes it even worse for people. These are sort of the most fundamental things that you can learn in a good economics course. It shouldn't take many hours to understand these issues, but people don't learn it in schools. They don't learn anything about money at all. You can almost say that economics and finance students don't learn very much about money at all. So, um, it's being hidden for people, unfortunately, and we just have to get the word out there. We have to spread the word and make people understand this.

Phil: Well, that's hopefully what we can do. Yeah, it is. It's difficult to make people understand this. It's just something that I've sort of grocked onto over the last ten or so years. And like many of us, you've got this background where you don't really understand what economic policy is. And I think it's great that what you're doing is trying to explain about this economic policy and how bad it is for ordinary people.

Rune: Yeah, but then of course, you can't just complain and explain. And man's playing all the time. People get tired of that. So you have to come up with some solutions as well. And I've tried to draft a few proposals on how to try to handle this, both from an individual point of view and a, uh, societal point of view.

What are the solutions for ordinary people affected by the current financial crisis

Phil: Yeah, let's talk about that. What are the solutions? What can ordinary people, if they understand what's being done to them, how can they react and make lives better for themselves? And part of it seems to be about where you live and what you do and whether you're going to be in the system or going to opt out of the system. And then the other thing is alternatives to fiat currency, things like gold, silver, bitcoin, and I think commodities as well. You mentioned in the book.

Rune: Yes, that's correct. What you point to there is that you basically have two options there, as an individual or as a family. One alternative is that you keep as close as possible to the money spigot. You work in the finance sector, you set up a, uh, limited liability company, and you make all your investments there. And you put all the money that you earn and also that you borrow to work all the time. It has to be working capital gear, your investments, you have to borrow as much as possible all the time. So basically what you are doing then is that you mimic the behavior of the super rich, of the Bill gates of this world, and George Soros, and also Charlie Munger, who's dead now, he passed away now. And also his colleague Warren Buffett. They borrow a ton of money and they leverage their investments that's what you need to do as a private person as well, but you should avoid doing it with your becoming personally liable for the loans that you take up. So, um, that's sort of the one drastic alternative. And then you have the other alternative on the other end of the scale. That is to do the very opposite, to remove yourself from the system and just shun debt as the plague and try to focus on cooperation with your family members, with your neighbors, with your local community, and don't spend so much money. It's very consumer driven, the economy that we have today, and it keeps us in the rat race. And you just have to take a deep breath and try to get away from that and then start using, uh, sound money. So one advice that I give to people is that, for instance, when you sell your used goods, your used bike or used car or boat or whatever, then you can tell the potential buyers that you will accept also payment in gold, for instance, or perhaps also in silver, and of course in bitcoin, just to make it clear to everybody that you practice the principle of monetary freedom. So it's up to them what they want to pay you with. And that's perfectly legal. At least in Norway it's legal. And then once you start to get a more sound private economy and with less debt and it's more focused on cooperation and you make use of sound money, you will see that people start to attract other like minded people. And that's probably one of the best types of resources that you can get access to the other people's brains and good hearted people's minds, their ideas, and cooperate with them. So I think it's possible, uh, for instance, now when we have bitcoin, which has become a huge success, it's a very big currency already, just 15 years after it was launched. So I think it's possible that we will see some wonders now in the next few years where we see that it's possible to start walking that bridge to more freedom and becoming less, uh, vulnerable, just being someone who's at the receiving of these evil policies. Now you have an alternative, and you can do this together with other people, perhaps in your local community or group of people that you associate with, that you almost can begin to be a little bit like the Dutch in the golden age, the Netherlands the golden age that they have few hundred years ago. I think it's possible, actually. So what you might see now in the years ahead of us is that you will see sort of small islands of freedom where people make use of more sound money, and they have less debt in the system, and they find each other, like, sort of nodes in a computer network and cooperate and become stronger, and they get a more solid economic foundation together. My dream is that everybody can become the Netherlands of the 16th and 17th century if try to embark on that road.

Phil: Yeah, go down that road and look for monetary. Do you think that the creators of bitcoin were informed by the ideas of monetary freedom, or did they just accidentally stumble upon them?

Rune: There's no doubt at all that they were informed about this. And there were a group called the cipher punks who had tried over, I think, since at least in the beginning of the something like that, when they understood that we would have this fantastic thing called the Internet. And Internet could be used politically to dominate the people and gaslight the people even more. But it could also be used as a freedom project and infrastructure for reclaiming your freedom. But they quickly realized that you need some electronic digital money in order to make it possible to reclaim your freedom. It's not necessary just to, uh, for instance, make it possible for people to interact with each other using cryptographic techniques, et cetera, which we're working on. So this was part of their plan all the time. They worked on it for 25 years or something like that before they succeed. And others also worked on creating alternatives to national currencies. The so called inventor of, uh, bitcoin, the famous Satoshi Nakamoto, who nobody knows who is, he definitely had a, uh, very strong understanding of money and the function of money in new economics. He most likely knew the austrian economics, I think. Definitely he did, or she, we don't know. So it was very important. But what they did was that they connected the dots. You might say they took the best from what they understood of technology, computer science, and mixed it with a very sound understanding of economics and created a, uh, fantastic new monetary technology, um, which is named bitcoin.

You also mentioned commodities as well. Why do you think commodities are something worth considering

Phil: You also mentioned commodities as well. Why do you think commodities is something that should be considered for investments?

Rune: I'm not an investor myself, and I'm careful to say that I don't give any investment advice, but that's right.

Phil: Well, we're not legally allowed to anyway. Don't make any investment decisions on what you hear on this podcast. Consult a financial planner, et cetera, et cetera.

Rune: But what is quite useful to try to understand is how a, um, manipulated monetary system shuffles economic resources around in society and which types of assets that go up in value and which types of assets that go down in value or don't increase that much in price, et cetera. And it might be that this monetary system we have today, which is the inflation policy, actually suppresses the price of, uh, commodities, and while at the same time it increases the price of stocks and stock funds. So it's sort of what they call a monetization of corporations. Corporations become a vehicle which is very easy to use in terms of when you take advantage of the system where money is created, when you borrow money, when you take up a loan. And it might be that is an impediment to commodities. It's not that, uh, it's easy to leverage a company, a corporation, but it might not be that easy to leverage commodities. So that's my idea. And other investors have looked more into this than I have been able to do. But what I think might happen is that if we see a transition from, uh, monetary monopoly and manipulation on the money supply and to monetary freedom, I think that it's quite likely that the prices of commodities, at least in a relative sense, will increase compared with stock.

Phil: Prices or to reflect their true value.

Rune: Yeah, perhaps.

Rune Erstgard's latest book Unbar is about geopolitics

Phil: Okay, Rune, so tell listeners about the book again and your other books and where they can find the book and more information about you.

Rune: So you find the fraud coin on Amazon. It's available in English on Amazon. It will also be available in other languages in a few months, in polish and English as well. And, um, my latest book is called Unbar, like remove the bars. And it's about monetary system and, um, geopolitics, and more specifically about this phenomenon, which we call globalization. So it explains the relationship between monetary policy and geopolitics, basically. So both of them are available on Amazon.

Phil: And before, what's your personal website? Again, just to remind listeners of that, we'll put all these links, of course, in the show notes and the blog post.

Rune: Yes, we have created this company, which is named Undoqo. That's undoqo. So you find us there, and you also find me on X, formerly known as Twitter and Facebook and LinkedIn as well. I'm, uh, mostly active on X these days, so join me there.

Phil: Yeah, it's where there's more fun. I always describe LinkedIn, um, as like the conference, and X is like the bar afterwards. Rune Erstgard, thank you very much for joining me on this in the previous episode.

Rune: Uh, well, thank you for having me, Phil. It's been a blast.

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