Great discussion on Bitcoin, history, and war with lots of disagreements. It’s a standard for civil discourse.
In episode 154 of The Bitcoin Standard Podcast, economist Saifedean Ammous and historian Niall Ferguson engaged in a discussion that ranged across a century of monetary history, from the origins of World War I through the Russia-Ukraine conflict. Their exchange demonstrated how an economist and a historian can push their perspectives assertively yet respectfully, disagreeing without talking over one another. Such conversations should set the standard for public discourse because they allow us to learn from views different from our own.
When Britain Chose to Fight
Ferguson argued that World War I was not inevitable, particularly Britain’s decision to join the conflict. He emphasized that the war became global only because of contingent political calculations, especially Lloyd George’s unexpected support for intervention in the August 2, 1914 cabinet meeting. Without Britain, Ferguson suggested, Germany might have defeated France and Russia by 1916, potentially creating a Central European Customs Union similar to the modern European Union. This alternate history may have prevented the Russian Revolution, Hitler’s rise, and immense bloodshed.
The irony, Ferguson noted, is that Britain barely prepared for the war it joined. The nation lacked a large standing army and had made no formal security commitment to France. This weakness meant that Britain had to build its military while fighting Germany, leading directly to disasters like Somme. The financial cost proved equally devastating. Britain emerged from the war with heavy debt, which ultimately weakened its global power. By choosing to intervene, Britain sacrificed its imperial dominance to preserve a European balance of power, a trade that left it exhausted and diminished.
The Monetary Aftermath
The conversation turned to the financial mechanics of the war itself. Ammous pointed to a 2017 discovery in the Bank of England archives in which John Osborne revealed that the bank had secretly purchased two-thirds of war bonds to create the appearance of public support. Ferguson contextualized this as typical wartime finance, drawing parallels to Napoleonic strategies. When the public will not fund a war through voluntary lending, governments resort to central bank purchases and monetary expansion. Ferguson noted that this was well understood by British officials as a necessary wartime suspension of normal economic rules.
The two debated whether this wartime inflation and the subsequent attempt to restore the gold standard at pre-war rates led to the Great Depression and eventually to World War II. Ammous, grounded in Austrian economics, argued that staying on gold at a realistic, revalued rate would have prevented decades of suffering. Ferguson, citing Barry Eichengreen’s work, countered that the post-war world was simply too changed by war, labor unionization, and democratic pressures to resurrect the old system. Flexible exchange rates, Ferguson suggested, would have suited the interwar period better than trying to force economies back onto an inflexible standard.
Yet Ferguson offered a broader historical perspective: the post-World War II era under Bretton Woods saw extraordinary growth despite being anchored to a dollar-based system rather than a pure gold standard. This suggests that what matters most may not be gold itself but stability and confidence in the monetary system. When that system eventually broke down in 1971, flexible exchange rates emerged and proved remarkably successful for developed economies.
Bitcoin and Digital Gold
Ferguson approached Bitcoin with skepticism tempered by recognition of genuine use cases. He viewed Bitcoin as an interesting option on digital gold but questioned its necessity in stable countries like the United States. In unstable economies with currency crises or capital controls, Bitcoin offers real value. Ammous, having lived in Lebanon and witnessing hyperinflation, testified to Bitcoin’s practical utility for preserving wealth across borders without government intermediation. Unlike physical gold, which cannot easily be transported internationally without permission, Bitcoin moves at the speed of information.
Yet Ferguson raised a crucial point about financial literacy. “We quite deliberately do not educate people financially,” he observed, leaving most people unprepared for a chaotic economic world where no risk-free assets exist. This deliberate ignorance serves the interests of institutions that benefit from financial dependence. Understanding the acquisition and management of resources, Ferguson argued, threatens institutional power by empowering individuals. This was an incredible point in the interview given Ferguson’s support of institutional power on a variety of issues. Here he’s recognizing that it’s the institutions keeping individuals ignorant about money. This viewpoint is rarely if ever expressed among the elite.
War and Money
Ferguson closed the discussion by connecting war to monetary disorder. Throughout history, he noted, wars are the primary driver of inflation. War forces governments to suspend normal economic rules to finance destruction and death. In such emergencies, central banks abandon restraint, currencies depreciate, and the historical process proves fundamentally chaotic and unpredictable. Ukraine today demonstrates this principle. Both sides believe time favors them, so the conflict will likely persist, driving sustained inflation just as World War I did a century earlier.
The episode revealed a truth worth remembering: monetary systems reflect political realities, not the reverse. Gold, fiat, or Bitcoin, the money that societies use is always subordinate to the demands of power and war. Understanding this history teaches humility about any monetary system’s permanence or superiority. The question is not which system is theoretically perfect but which one serves society’s needs in practice, and whether we educate our citizens to navigate whichever system we choose.