My Prologue for The Bitcoin Enlightenment, by @RicardoBSalinas My publishing house, The Saif House, has recently published The Bitcoin Enlightenment by Mexican entrepreneur, billionaire, and bitcoiner Ricardo Salinas Pliego, and co-authors, Pascal Hügli (@pahueg) and Daniel Jungen. I am sharing today the introduction I wrote for this fascinating book, and I hope you enjoy it. You can get your English copy from or Amazon, and the Spanish copy from Amazon US or Amazon Mexico. As a publisher at The Saif House, it is a true pleasure and privilege to be publishing The Bitcoin Enlightenment, a fantastic book that distills the wisdom of centuries of hard money civilization into terms that are easily understandable for the modern reader. Mr. Ricardo Salinas Pliego comes from a long line of successful businessmen and entrepreneurs who have developed and communicated this wisdom over generations, and we are lucky that he has taken time from his very busy schedule to produce this book, thanks to the great efforts of his co-authors Daniel and Pascal. In 2011 and 2012, while studying the works of the late Hungarian economist Antal Fekete, I came across several articles by Hugo Salinas Price, a Mexican businessman who presented a keen understanding of the monetary problems of his country, and how hard money could have prevented them. Mr. Salinas Price and others in the circle of Fekete were always fascinating to me, like a really interesting uncle who possessed some deep insights into economics, which are not easy for our generation to grasp. It was Fekete who first pointed me to the concept of stock-to-flow, and its critical role in determining what the market chooses as money. Fekete argued that gold’s monetary role is a function of the large size of its existing liquid stockpiles in comparison to its annual production. Because of the incorruptibility of gold, humanity does not really consume gold, we just accumulate it. As we accumulate larger quantities of it, new production of gold becomes an insignificant fraction of the total liquid stockpiles available in the market. Based on the data of the last century, the ratio of gold’s liquid stockpiles to its annual production has historically been in the range of 50 to 70. In other words, the global liquid stockpiles of gold grow at only around 1.5–2% per year. This low supply growth rate is unique to gold, and it means that at any point in time, gold miners are an insignificant player in the overall gold market. Even if the demand for gold rises and its market value increases, miners cannot meaningfully increase liquid stockpiles, since their entire production is a tiny fraction of these stockpiles. For metals with a lower stock-to-flow, mining output increases result in a substantial increase in liquid stockpiles, thus bringing the price down. It was always quite remarkable to me that such an obviously critical concept was so alien to a majority of modern readers, whose understanding of economic issues had been so thoroughly shaped by Keynesian and statist propaganda, that the matter of the increase in the supply of various monetary assets was almost entirely overlooked. Yet even more remarkable was that nowhere else in the writings of the Austrian School economists had I come across a proper elucidation of this particular point. As far as I can tell to this day, nowhere does Menger, Mises, Rothbard, or Hayek discuss this particular concept, and I would love to be corrected if I am wrong on this. Even to the Austrians who understood fully well the importance of gold in the monetary order, this particular point seems to have been taken for granted and overlooked. For economists reared in the gold standard, there was an almost unquestioning and blind belief in the inevitable monetary role of gold, that it did not need to be justified or explained. Far more pressingly, it needed to be advocated for. The market had clearly chosen gold as money, and there seems to be little interest in arguing why. Whether they were ignorant of this point, or thought of it as being trivial and inconsequential, is not entirely clear. I remained always fascinated by how such a profound point remained largely ignored. Understanding how the low stockpile growth rate of gold had given it its monetary role would prove enormously beneficial to appreciating the importance of bitcoin. Having been familiar with Fekete’s work, I was immediately interested in bitcoin when I first learned that it had an ever-declining low supply growth rate. When I wrote The Bitcoin Standard in 2017, I found the stock-to-flow ratio to be the essential conceptual framework around which the book was built. Not only does it help us make sense of the history of money throughout the millennia, leading up to the modern world, but it also provides the perfect entry point into explaining the economics of bitcoin, and even its technical operation. It is often said that the best way to understand something is to begin by understanding the why behind it. And when The Bitcoin Standard explained the importance of a low supply growth rate, it became possible to understand the true significance of the difficulty adjustment, which is arguably the most important technological breakthrough in bitcoin. By adjusting the difficulty of mining, Satoshi was able to ensure that the supply can grow according to the preset schedule, even with mining decentralized. Bitcoin was designed to have a stock-to-flow ratio that rises forever, until bitcoin production stops. While the importance of the supply growth rate was lost on the majority of people, this concept became quite popular among bitcoiners. I hypothesize that this insight appears a lot more vivid and meaningful to a bitcoiner than a fiater or even many goldbugs, because the bitcoiner is witnessing the rise of a new monetary asset in real time. The fiater cannot conceive of the importance of supply growth rate, because in his mind, money is what the state says it is. Many goldbugs are also incapable of understanding this point; they simply believe that gold is free market money, because there is an insurmountable amount of evidence that it was indeed the market’s money. But the bitcoiner, watching as bitcoin’s price continues increasing as its supply growth rate declines, cannot but miss the connection. Another associate of Fekete is the late Swiss banker Ferdinand Lips, author of the wonderful history of the gold standard, Gold Wars. Mr. Lips’ book was a fascinating history of the development of gold as money, and its essential importance to civilization, and it was also full of startling insights into history, economics, and money which will remain with the reader and alter the way you see the world. Lips seemed like a man out of time and space; a man operating on a gold standard civilizational operating system living in the century of fiat degradation, an anachronistic throwback inviting you to understand and imagine how different our world today would be with hard money. This book also draws on the work of Felix Somary, the Raven of Zurich, to explain the devastating impact of the disappearance of the bill of exchange in favor of fiat money, and the German economist Heinrich Rittershausen who astutely explains how government debt works, and why it so often fails so drastically. Like with Fekete’s stock-to-flow, the ideas of Lips, Somary, and Rittershausen have also resonated with bitcoiners a lot more than they do with the nocoiners. Something about the old wisdom of hard money ideas can penetrate to bitcoiners while the nocoiner mind remains impervious to it. The Bitcoin Enlightenment is a book in the tradition of these great and few men who truly and deeply understood the importance of hard money and its profound and far-reaching impact. Ricardo Salinas Pliego has distilled the wisdom he has learned from four generations of the hard money parents, uncles, grandparents, and great grandparents you wish you had. Four generations that have witnessed billions of percentages of fiat inflation consume their wealth, businesses, and societies, but always managed to come out on top in spite of it, because they could always tell the difference between real gold, and fool’s gold. Whereas my work, and the work of most bitcoiners, has focused on the monetary developments of the twentieth century and late nineteenth century, this book goes back much further. The discussion of the establishment of the Bank of England in the 17th century is highly informative. The emergence of the government bond market, and its relation to inflation, is also an extremely important and under-discussed topic which is explained clearly and lucidly in this engaging book. In a world consumed by inflationist propaganda, the Salinas passed on this knowledge generation after generation. It helped them stay rich, and it ensured Ricardo Salinas Pliego was one of the first business tycoons in the world to recognize the enormous value of bitcoin. Whereas fiat-minded investors and magnates of his generation continue to make pathetic comparisons of bitcoin to tulip bulbs and beanie babies, Mr. Salinas Pliego has been using his enormous platforms to inform his countless followers of the importance of bitcoin, and how it can set them free from fiat slavery. While bitcoin continues to function as the only lifeline available to millions worldwide, so many of the world’s tycoons and businessmen continue to fail to see its importance, particularly when many of them have been the beneficiaries of the very inflationary theft bitcoin eliminates. While most of them can afford to ignore bitcoin for now, the millions of people who follow them for financial guidance and inspiration cannot. I remember vividly how many of my friends and colleagues in Lebanon would dismiss bitcoin based on the words of Warren Buffet, Bill Gates, and other inflation beneficiaries and inflation enthusiasts. While the fiaters continued to bask in their fiat privileges, the people of Lebanon who listened saw their life savings vaporized in the currency crisis that started in 2019. It is difficult to overstate how important it has been to have an advocate for bitcoin of the calibre of Mr. Salinas Pliego. He is one of the most well-known faces in Mexico, familiar to the tens of millions who buy products from his countless shops, use his financial services, watch his TV stations, and hear about his financial successes and magnificent lifestyle. Millions of Mexicans follow him on social media to learn of his ideas. Having him constantly speak about bitcoin has undoubtedly influenced countless people worldwide to take bitcoin more seriously. One can only imagine how many lives he has saved from misery and destitution by pointing them to bitcoin and clearly and repeatedly telling them to save in it. More than just a very helpful guide to understanding the historical significance of bitcoin, this book also contains the practical business wisdom of an entrepreneur triumphing over a terrible government policy. I very much enjoyed this book, and hope you enjoy it too.