December 6, 2022

Today, Preston Pysh is joined by Sam Callahan and Bitcoin activist and author, Alex Gladstein. Alex has recently conducted extensive research on the impact of the IMF and World Bank and how Bitcoin may resolve many of unintended consequences of their destructive global policies.

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  • So what is the intended mission of these organizations (IMF and World Bank)?
  • What is Structural Adjustment and why is the impact misunderstood?
  • The story of Shrimp in Bangladesh and how it helps listeners understand Structural Adjustment.
  • Why the IMF and World Bank never found a dictator that didn’t like.
  • How and why countries that take on IMF loans are more likely to take on even more debt in the future.
  • How countries that have taken the most loans are also the countries that have the highest concentration of Bitcoiners.
  • How poor countries are in essence subsidizing the abundance of rich countries while destroying their ability to be self-sufficient.


Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:03] Preston Pysh: Hey everyone, welcome to this Wednesday’s release of the Bitcoin Fundamentals Podcast. This week I have a really powerful interview with Mr. Alex Gladstein and Sam Callahan. For most people that participate in financial markets, they’ve most likely heard of the IMF or the International Monetary Fund and the World Bank, but they’re probably used to hearing stories about how beneficial they are for all these different countries around the world.

[00:00:25] Preston Pysh: Well, Alex Gladstein is part of the Human Rights Foundation, and he’s about to tell you some insane stories in research he’s done on these global NGOs that contradict a whole lot of conventional thinking. Additionally, Sam Callahan has spent numerous years researching the IMF and World Bank, and he joins me to help ask questions of Alex’s research.

[00:00:45] Preston Pysh: This is an episode you’re not going to want to miss. So with that, let’s get started and thanks for joining.

[00:00:54] Intro: You’re listening to Bitcoin Fundamentals by The Investor’s Podcast Network, now for your host Preston Pysh.

[00:01:13] Preston Pysh: All right. Hey everyone. Welcome to the show. I’m here with Alex and Sam. Alex, welcome back to the show. Sam, welcome back to the show. I am very excited to get into this.

[00:01:23] Alex Gladstein: Very happy to be here, gents.

[00:01:24] Sam Callahan: Yeah, happy to be here, guys.

[00:01:27] Preston Pysh: Alex, this is for I’m, I’m somewhat speechless. This article you wrote is an absolute whopper.

[00:01:35] Preston Pysh: I just recently tweeted it out and I said, I think every world leader needs to read what you put out here. I mean, I, the first thing I did is I, I copied all of it over to, and people can see this on YouTube that are watching. I copied this over to a Word document. I printed the whole thing out, and then I just started reading and highlighting everything. Yeah, I think-

[00:01:54] Alex Gladstein: It’s like 50, it’s like 55 pages, single space.

[00:01:56] Preston Pysh: Mine was more, yeah, mine was more than that. I want to say I was close to like 80 pages when I printed it off, and the first thing I’m thinking is, this is a book, this is, this is a manuscript of everything that highlights and showcases what has happened since inception of the IMF and the World Bank.

[00:02:18] Alex Gladstein: I’m happy to, happy to share that. Well, I will be making it into a book and really releasing it early next year. But really in the meantime, I really just had to get out. You know, I didn’t want to wait. There were a couple reasons for that, that. And I realized for the guests, we haven’t even gotten into like what this is yet, but I promise we will.

[00:02:35] Alex Gladstein: One of the reasons I really wanted to get it out was, number one, we’re kind of seeing a repeat of what happened in the early eighties with the third world debt crisis right now. So you’re seeing the IMF go in and try to bail out all kinds of governments ranging from Egypt to Sri Lanka, to Ghana, et cetera, et cetera.

[00:02:52] Alex Gladstein: The dollar system is under duress. The value of the dollar versus the other fiats, as we all know, is, is, is shooting up just like it did in the early eighties. It’s causing like huge, huge stress for these like weaker fiat currencies. They are unable to service their debt and they, you know, quote unquote need some help.

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[00:03:12] Alex Gladstein: So that’s kind of when the IMF comes in, right? And, and you’re seeing that and it just feels like deja vu from, you know, everything that I’ve read about what you know, sort of started to transpire in the early. That’s one reason I wanted to get it out there is that it just feels like we’re, we’re enter, you know, history rhymes.

[00:03:26] Alex Gladstein: It feels like we’re entering into a similar time and it would be really good for people to understand the dynamics behind that. The second thing is next week, you know, recording this on December 1st, this coming weekend, next week I’ll be in Acra, Ghana for the Africa Bitcoin Conference. And I tried to, you know, I basically concluded the, the essay in part by referencing Ghana diving into Ghana’s history a little bit.

[00:03:49] Alex Gladstein: Ghana is a country West Africa that suffered under bridge colonialism and then, you know, has had an interesting upsides, downsides, you know, rollercoaster story of independence ever since. But along the way it, it had, you know, 16 IMF loans essentially. And as we’ll discuss, that essentially means the country was sort of like structurally adjusted 16 times.

[00:04:12] Alex Gladstein: And we’ll get into what that means, but it’s kinda jarring for the people who live there. And they just got a visit a few weeks ago and they’re about to be bailed out for sort of the 17th time by the IMF. And, you know, that entails a visit by these, you know, bureaucrats to, to Acra Ghana to discuss with the government, you know, a deal essentially, where they’re going to receive a loan and in return they have to sort of like, change the economy of the, of the country.

[00:04:36] Alex Gladstein: And, you know, there’s a lot of conditionality there. And then it’s such a really vivid contrast from the Africa Bitcoin Conference where a bunch of us are also flying to Ghana, but instead of, you know, dictating to that country how it can run its industries and imposing like all kinds of austerity measures on that country, we’re going to be sharing information with people about how to use open source software to achieve economic freedom.

[00:04:59] Alex Gladstein: And I, I just thought that was such an interesting kind of timely occurrence. So for those two reasons, I just really wanted to get the thing out there, but, but it’s not like I rushed it. I’ve been working on it since the summer. And as far as like one single thing that’s cohesive, it’s the longest thing I’ve ever written.

[00:05:15] Alex Gladstein: And it’s also just sort of, The longest ever worked on something. My book and other things I’ve written have kind of been different stories tied together. This one is kind of one narrative that I worked on, and yeah, I’m super excited to release it. It’s very dark and grim, but I do think there can be some change.

[00:05:31] Alex Gladstein: And if anything, I hope our conversation today can just shed some light on this system in the history. There is no like solution to, to what the IMF and World Bank have done and what they kind of stand for, but I think it starts with knowledge and it starts with us understanding what happened and then maybe we can work from there.

[00:05:46] Alex Gladstein: I think that’s a, that’s about as best as I can ask.

[00:05:50] Preston Pysh: I’ll just, I’m going to sort of throw this out here. I think this is a masterpiece. I think the organization of it in which you go through and lay out, you know, line by line, it, it is just so well constructed is what, I guess is what I’m trying to say. So let’s, let’s start here.

[00:06:09] Preston Pysh: We need to start off kind of defining what their objective or what they think their objective is. And when we look at, and what we’re really talking about, IMF World Bank working together, how you defined it. In your article, you said their objective is to help raise living standards in developing countries by channeling financial resources from developed countries to the developing world is what they would claim.

[00:06:35] Preston Pysh: And so then immediately after that, in your article, you pose the question, what if the reality is the opposite? That they’re actually doing the exact opposite of that. So walk us through why you pose that question and because I think for a person who’s hearing this from the outside, they’re just like, come on.

[00:06:53] Preston Pysh: There’s no way that they’re literally doing the opposite of what they’re mandated to do.

[00:06:58] Alex Gladstein: Yeah. And so I’ll give a little overview and then be, you know, we can get Sam involved. I’d love to hear, you know, his thoughts on this as well. But essentially I began my journey as a curious observer of the IMF and World Bank.

[00:07:11] Alex Gladstein: I, like many other people in the Bitcoin macroeconomic space, I kind of had a feeling they were up to no good, especially the IMF. I, of course, along the way over the last few decades had read things here and there, but I don’t know what it was. But in late summer, I, I just started to realize that I, I didn’t really understand, first of all, really the difference between the two very well, and, and I didn’t really understand their history comprehensively.

[00:07:35] Alex Gladstein: And I started to look around. What triggered my essay was the fact that I started to like, look around for books on the topic. And there just a very, very few, that was what was interesting to me. I’m like, wait a second. There’s, there seems to be, you know, so few books on this. And I was curious about that.

[00:07:51] Alex Gladstein: And I did end up digging up some incredible books on the topic, but they’re older, they’re from the seventies, eighties, nineties. There isn’t a whole lot from the last few decades. And I also found that, you know, interestingly, and I, maybe not surprisingly, Most of the critical thinking about the bank and the fund were sort of done from the leftist perspective, like the Marxist perspective, which I guess makes sense in some ways.

[00:08:13] Alex Gladstein: There’s also some good libertarian analysis, which, which we’ll get to. But you know, it had kind of been reaching the, the analysis and the debate around the bank reached to crescendo in the, in the nineties, and then it’s really been very little ever since. And it just is not part of our discourse these days.

[00:08:29] Alex Gladstein: And when I started to realize that there wasn’t a lot written about it, and then I started to realize when I started doing some kind of cursory reading of, well, what’s the structure? How were they founded? What did they do? When I realized that they were bigger than ever before and that they were kind of more active than ever before, I was like, wait a second.

[00:08:45] Alex Gladstein: I need, I need to learn more here. So I guess to go back and I appreciate your kind words about the structure I, what I ended up doing is a process of just a lot of research and interviews that amounted to, I don’t know, four to five times the volume of words that are in the essay. And just I trimmed down for the final piece and I, I originally was thinking I could get it to like 10,000 words and I was like, you know what?

[00:09:10] Alex Gladstein: I’m just going to write what I need to write and we’ll see how long it is. It ends up being 22, 20 3000 words. I was joking with Lynn Alden the other day that I kind of like, you know, tying her for her, her longest piece. But yeah, I, I took my time and I think I’m happy I did. So because you, it really, you need to allow for a lot of these examples.

[00:09:28] Alex Gladstein: Yeah. So, so of the listen, the reader, the listener can, can understand.

[00:09:33] Preston Pysh: Alex, the amount of sources that you provide to all of the examples you that you throw out there, which you throw out a lot of evidence here is just incredible. I mean, that’s before you joined us, Sam and I were talking and we were just kinda laughing.

[00:09:48] Preston Pysh: We’re like, my God, this, this was well insane.

[00:09:52] Alex Gladstein: Two things. I mean, one, and, and what I was discussing today with my publishers, I want to do a really nice bibliography for when I release this so we can have kind of all the books, at least in an orderly way. So the, the reader, when they’re done, they can look at all the books and I really want, want people to read some of these books.

[00:10:06] Alex Gladstein: Some of these books are just amazing and you’re not going to agree with everything in these books, but they really are onto something. So I had the books and then, you know, one absolute treasure that I encouraged Bitcoiners to support is something called Sci-Hub. Andy Hub has been like such a crucial thing for me.

[00:10:23] Alex Gladstein: I know that this is sort of deep in Bitcoin culture because of Aaron Swartz and, and so many other people in Bitcoin who promote free knowledge. But you know, TLDR the academic academia has a monopoly over research papers and they make you pay a ton of money to read them, which is so self-defeating from my perspective.

[00:10:40] Alex Gladstein: So there’s this communist woman in Kazakhstan who runs this website called Sci-Hub, and she’s got like every single J-Stor research gate paper you can imagine. And you just go to Sci-Hub and you paste in the link and you can read the whole thing. So this is the only way to learn about like what’s going on in structural adjustment in Argentina in 1961.

[00:11:02] Alex Gladstein: Like, you’re not, you’re not going to, you know, unless you’re willing to go to a library and do microfiche stuff like this is, this is how you do it. Sci-Hub. So I was able to read literally dozens and dozens and dozens of, you know, really terrific old detailed articles about the first five, six decades of the fund this way.

[00:11:18] Alex Gladstein: So what’s cool is they, they take Bitcoin donations, so I would encourage Bitcoiners to support iub and open and free knowledge. But anyway, what this revealed to me was that at the beginning, you know, look, the bank and fund were created in Bretton Woods in 44, as most your listeners probably know, as two of the like key pillars of the New American financial world order.

[00:11:38] Alex Gladstein: And initially the bank. A development bank, and it was supposed to fund infrastructure projects in Europe and Japan to help them rebuild after World War II. And the fund was supposed to address balance of payments issues. And this usually arose when, for example, a country’s imports started to outpace its exports, no longer pay step back.

[00:11:55] Alex Gladstein: So the idea was that the IMF would step in, give them a loan, try to get them back on their feet. So, you know, the initial creation, I don’t really find anything kind of sinister there for their first, let’s say 15 years, they performed this function reasonably well and they helped Europe sort of get back on its feet.

[00:12:13] Alex Gladstein: Now that there’s some, some red flags and exceptions there, but I’m willing to grant the institutions that, let’s put it that way. But what sort of ends up happening is like, once Europe and Japan kind of recover, like by the late fifties and, and are starting to really, you know, dominate again the focus of the bank and funds shift to the emerging markets or what was called the third world.

[00:12:32] Alex Gladstein: And I, you know, I used the third world as a term kind of a loosely. Overlapping with the developing world and also poor countries. I mean, because there isn’t really a good term, you know, there isn’t really a perfect description of what I’m talking about, but what I’m really talking about is the countries that are outside of what was then the Soviet Union and the United States, Europe, Japan, and sort of let’s say like, you know, former British possessions like Canada and Australia we’re talking about the rest of the world and that was called the Third World for a long time.

[00:13:04] Alex Gladstein: So I’m comfortable using that phrase. I know it’s a little dated, but, but I think it’s, it’s pretty accurate for us today, at least for our conversation, especially because so much of the work that I work, the IMF World Bank did was, was during that time. But what I noticed was that the kinda, the outcome of their policies really changed when they started to focus on the developing world.

[00:13:25] Alex Gladstein: And one of the really striking things is that the research reveals that the world is not. Free market. I mean, that’s one of the biggest things I learned from doing this. And, and, and I kind of knew that before. I mean, I’ve written about how the dollar became the reserve currency and how the US government sort of killed gold and all these things.

[00:13:44] Alex Gladstein: But this really opened my eyes in terms of just how sort of centrally planned everything is. And then you start asking big questions about, well, how, you know, what, what is, what can capitalism be if everything is so centrally planned? Right? So what I’m getting at is after World War II, all of the like industrial countries, all of the first world countries, they’re often called the Global North, the West, et cetera.

[00:14:07] Alex Gladstein: They used like a variety of protectionist, anti-capitalist status measures to protect their economies. So this happened in like the 40, late forties, fifties, early sixties especially. Some of these things have never completely faded away. Like for example, the US still has, you know, massive agricultural subsidies.

[00:14:27] Alex Gladstein: All kinds of like tariffs on, on different kinds of goods from abroad, like steel, these kind of fade. And they, they’re cyclical, but, but they’re always with us. But for those first few decades, these things were like super intense. And it was because these industrial countries, these power, the powers wanted to protect their economies as they were rebuilding.

[00:14:45] Alex Gladstein: And the thing is, you know, I’m a free market guy at heart. Like I believe in that what the promise of capitalism, that’s like really what I believe in is, is free markets and free trade. But when you have the powerful countries closing their doors to trade, right, and erecting barriers, and then what they end up doing in the sixties and seventies and eighties is going to poor countries and saying, Hey, you guys have to do X, Y, and Z and we’ll get into that to accept these loans.

[00:15:13] Alex Gladstein: The IMF and the bank would go to these countries and say, look, you want this money, you can take it, but only if you do these things, if you restructure your economy in these ways. And basically they were getting these economies to quote unquote, like liberalize it and open up, but it wasn’t a fair. Ask because the western rich countries weren’t doing the same thing.

[00:15:30] Alex Gladstein: So it’s kind of like a, a stacked deck. It’s, it’s not a fair playing field. So while I, while I oppose the solutions, quote unquote from a lot of the writers that I quote from, because they tend to be socialists and Marxist folks, I think their solutions are bad. Like, you know, they tend to be like, you know, let’s just skip government all the power.

[00:15:49] Alex Gladstein: And I’m like, wait a second, aren’t you telling, isn’t your whole point that all these third world countries were dictatorships than corrupt and human rights abusers? And now you’re saying we should give them all the power back. Like I, I don’t think they ever had a good solution, let’s put it that way.

[00:16:01] Alex Gladstein: Yeah. But I think their observations are really correct in criticizing kind of what the bank and fund were doing. And the reality is, you know, these countries were kind of stuck in between basically like austerity measures that would change these economies in these poor countries to focus on exports over consumption.

[00:16:21] Alex Gladstein: Almost like a private equity firm would look at a corporation when it’s about to do a takeover. They’d be like, how can we reduce expenses? Right. That’s kind of like what the bank and fund do. When they look at a poor country, they’re like, okay, how can we reduce expenses? And it’s like they don’t think about the social cost of that, right?

[00:16:36] Alex Gladstein: Yeah. Yeah. So you have that kind of perspective and you have all kinds of favorable conditions for multinational corporations from the west or the north coming in. So understandably people don’t like that. But the other option was like, you know, some socialist dictator or whatever. So that was also bad.

[00:16:56] Alex Gladstein: So, you know, it was really tough for, for a long, long time. I, I think one of the reasons the system has never been stopped is because there really wasn’t a good alternative and because every actor that had power wanted to keep it. So these third world crooks and dictators were super, they were delighted to be adjusted and take the money.

[00:17:16] Alex Gladstein: Yeah. Because they, they weren’t thinking 10 years, 20 years down the road. They were just like, you know, living in the now and buying weapons and palaces and, you know, Veronica estates and, and car fleets and expensive wine and whatever with the money. And the, the creditors to the bank and the fund were very happy to make their money.

[00:17:35] Alex Gladstein: And they, they didn’t want any bankruptcies. Like they, they didn’t want any of these governments to go bankrupt. They wanted to preserve that the, you know, the, their balance sheets. So everybody had an incentive to keep the lending party going. And I think that’s still true today and it’s going to require a paradigm shift to, to change it.

[00:17:57] Alex Gladstein: But that, that’s kind of my overview of, of the situation. And, you know, from there, I, what I really started to discover was that, Again, once the bank and the, and the fund were like, you know, retargeted towards the, the third world, they, they started to engage in behavior that that resembled old school colonial dynamics basically.

[00:18:22] Alex Gladstein: And that, that’s really what a lot of my essays about is the fact that for hundreds of years, bill Powers had this sort of conveyor belt of either free or cheap resources and, and, and cheap labor from these countries in the periphery. These core countries had all kinds of stuff flowing in to help subsidize the way of life in, in London and Berlin and Paris and, you know, Washington, et cetera.

[00:18:45] Alex Gladstein: And then between 1920 and 1960 colonization really kind of like, you know, it, it, it went extinct, essentially like, you know, true colonialism, let’s say. And that was a really large free source flow that was cut off from, you know, societies that, that had become used to that. And there’s an interesting theory I uncovered when I was doing the research from, again, some Marxists, so you know, take it with a grain of salt.

[00:19:09] Alex Gladstein: But I thought it was really interesting that, you know, we always debated about what caused the Great Depression. And of course it’s usually, well, is it because we left the gold standard or is it because we didn’t leave it soon enough? Right? That’s usually the, the sort of Austrian versus Kenzie and debate, right?

[00:19:23] Alex Gladstein: Well, these folks say, well, it’s also because the west just lost like a massive conveyor belt of resources that it was getting like, essentially for free or, or for very cheap. And that resource flow came to a Hal, you know, started to grind to a halt after the twenties. And I thought that was, that’s very convincing to me.

[00:19:42] Alex Gladstein: I mean, that makes a lot of sense. So I think that that’s also an interesting factor probably in the Great Depression that we don’t, we don’t quite think about too often. But in any case, the great powers at the. You know, face this dilemma as they were pulling away from their former imperial possessions, the 1960s, kind of known as the, you know, the official end of colonialism.

[00:20:03] Alex Gladstein: Right. And that’s, that’s exactly when the bank and the fund shifted their attention to the, the third world. So they started basically doing, and again, I don’t know if they sat around in a room and like planned this, but the outcome was similar in that, whereas before the British Empire would go to some country and, you know, lose the resources and bring it back to Britain.

[00:20:25] Alex Gladstein: Now it was done without violence. Right. But what ended up happening was alone, was extended, let’s say, from the World Bank to a similar country for the construction of, let’s say a hydroelectric dam and a train and you know, a rail system and a. And that would be to extract mineral resources from a remote place, put it on a train, bring it to the port, and ship it to international markets.

[00:20:49] Alex Gladstein: So the loan would be extended to a poor country. Okay? So meaning that government now all of a sudden, eventually is going to owe principle and interest, right? So they’re saddled with that. Meanwhile, the creditor nation that, that had paid for this through the bank of the fund, their companies come in and do the work, right?

[00:21:06] Alex Gladstein: So this is called like a double loan. So they come in and they, they’re like paying outta one hand into the other, right? So, you know, the, the, the British for example, would, you know, make the loan and then British companies would take the money and, and build it all. And then with the outcome, the structural outcome of what just happened, they’d be taking, whether it be B site or gold or tin or copper, whatever, like right outta this country with no benefits to the local population, right?

[00:21:33] Alex Gladstein: Back to international markets. So in a way, my argument is that the bank and fund recreated the colonial drain dynamic. But without, without violence. Essent, well, you know, without, without straightforward violence. Instead they use debt as, as the weapon. And they’re, and I think that was like, that was really, that, that was jarring for me when I realized that.

[00:21:53] Sam Callahan: So they’re using debt to extract resources from the?

[00:21:57] Alex Gladstein: Yeah, yeah. I mean the, the two kind of big playbooks were first extraction, which usually came alongside with a he healthy serving of environmental destruction and, you know, horrible labor conditions, let’s say even our rights violations. And then also agriculture is always big, right?

[00:22:14] Alex Gladstein: Agriculture is a much bigger force in the world than we, than we give it credit for. I know there’s a rising interest among some of the Bitcoin community in, in, in food and where food comes from. I think that’s really important and healthy, like, like food is so, so important. It is very rarely talk like agriculture is like this boring topic, but in reality it’s so, so, so important and it doesn’t really get enough attention.

[00:22:36] Alex Gladstein: And the US has, has really. Focused a lot of its energy on shaping the world’s agricultural policy post World War II. So its benefit. And really what you end up have happening here is if, if the bank, you know, wasn’t doing, wasn’t financing resource extraction, what it was, financing was what they called the modernization of agriculture.

[00:22:56] Alex Gladstein: And what that would mean is you would be engineering a society that used to do consumption in agriculture, where you had a bunch of people that were very poor, but at least could feed themselves. And they were, you know, independent, let’s say. And it transformed that society to a country which is probably still very, very poor, let’s say, especially given, you know, inflation over the decades.

[00:23:17] Alex Gladstein: But they can no longer grow food that they eat and they have to buy it from the market, and they become reliant on the west. So, so the, the, the outcomes of this are completely staggering. Like Africa imports almost all the food that it eats. That is insane. This is one of the richest continents in the world in terms of agricultural capacity.

[00:23:33] Alex Gladstein: It’s, it should be at the bread basket of the world. Instead, you know, it’s been shaped so that all these poor countries in Africa export things like cocoa, coffee, tea in East Asia, it’d be things like palm oil, rubber. So the World Bank loans would, would, would basically incentivize farmers to pick up and leave from growing, whether it be grains or cattle or whatever.

[00:23:57] Alex Gladstein: You know, things that people actually eat and refocus them on. Exports, aquaculture’s really big, I talked about that, obviously, you know, so shrimp, fish, things like this that are, that are not to be eaten by the locals, but are to be exported to wealthy countries. So the agricultural capacity is changed to benefit others around the world.

[00:24:17] Alex Gladstein: And in sort of in, in, in, as a response to that, those countries now have to import food. And this was, this was a very conscious policy by the US and by Europe in the forties, fifties, sixties, seventies. Like, they, they really, really wanted to play in markets for their own agriculture. As we all know now, as we’ve been debating for the last year and a half, especially after the invasion of Ukraine.

[00:24:37] Alex Gladstein: It’s all about food, food independence, and energy independence. Right? So this, this has been known for a long time, right? So the US and Europe, you know, really understood this and, and they shaped the world accordingly. And it’s, it’s just, it’s a, it’s been a devastating, devastating outcome. And you have all these countries that have, again, really rich traditions of food and extremely productive ways to grow food, efficient ways to grow food.

[00:25:04] Alex Gladstein: And they’ve been engineered to grow stuff for us to consume. So that, that was, that’s, that’s, that’s been a really big realization for me. Let’s put it that way.

[00:25:16] Preston Pysh: One of the things that I got out of this that I’d never thought about when thinking about the IMF and, and the World Bank, so Sam and I were talking out at LA about supply chains and how they’re breaking down and how there’s so much consolidation around the world because of central banking policies that have consolidated enterprise and there’s only a few vendors now that can supply whatever part of the supply chain.

[00:25:43] Preston Pysh: You look into, you talk about this idea of mono crops, which you were just talking about. Right. What I find so fascinating is what we’re seeing at a company level inside of unique supply chains. You’re talking about at a country level, that because of the manipulation that was happening through the IMF and the World Bank, Has caused these nation states to have a mono crop, like they’re just exporting shrimp.

[00:26:17] Preston Pysh: And this is all through, and I think this, this term is really important and it’s, I, you know, as I look at your entire article, I’m saying this idea of structural adjustment loans that have, loans that have these ties back to things that your G seven Nation states want into the global economy. And I, I, I really want to go down this path of the first example you have in, in the story with shrimp and Bangladesh.

[00:26:46] Preston Pysh: Yeah. Tell people this story so they can really wrap their head around this idea of structural adjustment, the damage that it does. To the nation state because now they got this mono crop and they have no robust biodiversity of enterprise and business inside of the, their organic country. And they’re not, they’re relying on everybody else and they can’t be self sufficient.

[00:27:11] Preston Pysh: Tell us the story of the shrimp.

[00:27:13] Alex Gladstein: Yeah. I wanted to start with Bangladesh. I just was so moved by this story. I came across it in a bunch of books written in 94 because that was the 50th anniversary at Bretton Woods. So there was a lot of retrospective material written at the time, and I just came across this story.

[00:27:29] Alex Gladstein: It wasn’t super fleshed out, but it was a kind of a testimony of a worker in Bangladesh. And again, this was 94, so a long time ago, but talked about how, and I, I quoted from her and, and she, it’s just her testimony of like how her life has changed because of the shrimp farming and that was so powerful. So I wanted to open the essay with it because it’s kind of this like grimly perfect me, you know, example of, of structural adjustment, but basically like, Here was a country that, again, poor country, but pretty independent, had a very rough history in the sixties, seventies.

[00:28:01] Alex Gladstein: Not only did it suffer enormously at the hands of colonialists, basically the British, you know, around pre World War II, World War II, I learned in my research that in what is now Bangladesh, the, the British basically took all the wheat from the local population to use in the war theater in World War II and ended up starving millions of people.

[00:28:25] Alex Gladstein: And Churchill and Kanes, John Mannard Kanes were, were responsible for this. I learned about this. I did not know this. So Kanes was, was literally the, you know, an architect of a massacre, you know, a mass atrocity of killing millions of people. It’s crazy. You know, these are, these are people who had constantly been under foreign pressure in the seventies.

[00:28:46] Alex Gladstein: They had a huge, you know, war. I mean, there was breakaway of, of what was then called East Pakistan and people suffered again. And they had another famine where the US government was involved actually. And you know, they, the, you know, it was all called war politics, right? So Bangladesh had been selling stuff to Cuba, and so Soviet Union America didn’t like that.

[00:29:07] Alex Gladstein: So we, and this was all Kissinger stuff. Like we, we withheld grains from them. You know, by this time, by the seventies, we had, we had been pretty effective at becoming kind of the dominant, like kind of controller of a lot of the world’s food. This was obviously a strategy we used in the Cold War, but, you know, they, they were like, they were in a tough place and they were running outta food and the US just like did not let the food in and just killed like another million people in the mid seventies.

[00:29:32] Alex Gladstein: So this society was, had been through a lot, and to make matters worse, they. Always we’re hit by these crazy cyclones. So there’s one cyclone in the seventies that killed a million people. It’s like a deadly storm river. And this is a lowly country on the, on the coast of the Bay of Bengal. And it’s kind of, the bay has shaped like a tunnel.

[00:29:50] Alex Gladstein: So these storms come in, they, they, they get, they gain powers, they move north and they, they send these massive waves out over the population. A third of the population lives along coast. So in the sixties, the pop, the authorities built like these big dykes to protect people. And then they had these like mangrove forests, which were the natural protection.

[00:30:08] Alex Gladstein: So, you know, this was all they had, these were the defenses they had. And what ended up ended up happening is the World Bank and IMF, you know, kind of take a look at Bangladesh in the seventies and they basically say, you know, you’re not exporting enough. They had started to lend a lot to the country’s autocratic rulers and they.

[00:30:30] Alex Gladstein: Would send teams of analysts and try to figure out, well, how, how can we generate more exports for this country so it can pay its debt back? Basically, that mean that was sort of the deal. So they said, look, let’s do aquaculture. Let’s do shrimp because you guys have a lot of shrimp off your coast. So World Bank loans financed this in Bangladesh.

[00:30:49] Alex Gladstein: At the same time that the IMF was extending these structural adjustment loans, which were also sort of targeted at, at shaping the Economist way, what ends up happening is you have all these farmers who traditionally grow again, like rice, cattle, et cetera. They’re on these low lying parts of land near the ocean.

[00:31:06] Alex Gladstein: A lot of it had actually been reclaimed through the dyke system, and now they’re, they’re being incentivized to take out loans to upgrade their farms. Upgrade by drilling holes in the dykes to let water in. And, and they’d make ponds. And then they, they’d go into this like often freezing water. And they spend all day like catching like little shrimp, they call it shrimp fry.

[00:31:26] Alex Gladstein: And then they bring the shrimp into these ponds and then they wait for the shrimp to grow. And then when they get big enough, they, they sell them to these like shrimp lords who then sell them to the government. And then those go out to the international markets. So this is the change that, that, that happened in the seventies and eighties, nineties in this area, did a couple things.

[00:31:45] Alex Gladstein: It, it really impoverished a lot of people, because again, these, these people had very little and they, they borrowed to, to the money, to, to change their farm in this way. And in many cases, like it took them a long, long, long time to even pay back that initial loan. I have some data in my essay about this, but it’s, it’s like, in some cases, essentially they, they were experiencing wage deflation.

[00:32:05] Alex Gladstein: Like they were just sort of getting poorer over time and they were also depleting the environment around them. Like not only where the mangrove forest protected them getting cut down, about half of them got cut down as a result of shrimp farming and the dykes were getting damaged. So this left them really vulnerable to these storms, which keep happening, but also like the farmland itself became super salty because of all the water coming in.

[00:32:30] Alex Gladstein: So rivers were destroyed, you know, a lot of like crop animals died. Like, so, so basically this is like a, this is like an environmental disaster now. It it does one thing. It, it raises shrimp and, and shrimp is the second largest export today in Bangladesh. I mean, it’s gone from something that was like a couple million dollars a year to.

[00:32:49] Alex Gladstein: You know, an industry where I think it was like 80 or some 80 million or, yeah, no, I mean, I, I national Shrimp Profits group from 2.9 million in 73, which is when these things sort of just start these loans to 90 million in 86 to, to almost 600 million in 2012. So it, it’s those of an exponential rise in these profits.

[00:33:09] Alex Gladstein: And, and again, after textiles, it remains the second largest export of this country. And, and again, these loans were taken by autocratic governments, for the most part, who, who were not accountable to the people. And I just think that this is a really vivid example of like what structural adjustment is.

[00:33:25] Alex Gladstein: Now that’s kind of like a, a detailed example of one country.

[00:33:28] Preston Pysh: Now, Alex, people would hear these numbers. This is important. People would hear those numbers and say, well, what’s wrong with the numbers going from 1 million up to these really high numbers that you just said? Now you talked about the damage that was done to the farmland and everything else, but I think for a listener that would hear that, I don’t think that they understand that you’re just talking top line.

[00:33:50] Preston Pysh: You’re not talking other impacts and the payback that’s associated with the interest on these rolling loans. Right? Like there’s a whole lot more to those numbers.

[00:34:00] Alex Gladstein: No. Well, so first of all like, well, let me just do a brief overview of structural adjustment and then I’ll explain why those numbers sound a lot more rosy than they really are.

[00:34:09] Alex Gladstein: Yeah, right. Yeah. Okay. So structural adjustment again, are loans given out primarily by the IMF ever since its inception and then since 1980 by the World Bank. Before 80, the World Bank largely gave project inspector sector specific loans that didn’t really have conditionality. But since 80, the structural adjustment loans have been a big, big part of the World Bank’s policy as well.

[00:34:29] Alex Gladstein: So these loans are, are attached to conditions. So basically, classic example would be country like Indonesia in the seventies would have balance of payments crisis. The dictator would call IMA IMF would fly in. First class business class, they never flown a flu economy. They always, they always had a lot of perks.

[00:34:48] Alex Gladstein: They came in, they’d iron out a deal and they would say, okay, you can have what was called like a standby agreement, just like a line of credit. And you can draw that down at certain milestones, but you need to like fulfill these conditions to do so. And these conditions were basically things that like would never fly in in a Western country, right?

[00:35:05] Alex Gladstein: Would never fly like in a democracy where people could actually protest, but they’d be like, for example, currency devaluation. Total kind of abolition of for foreign exchange and import controls, shrinking of domestic bank credit, jacked up interest rates, jacked up taxes, and any sort of subsidies on food and energy ceilings is on wages restrictions on governments spending in healthcare and education, favorable legal conditions from multinationals.

[00:35:31] Alex Gladstein: And then sort of selling off state enterprises at cheap prices. Now, some of your listeners may say, well, some of those things sound really good, like we’re free market people. But the problem is that. Is the double standards. Like you have Britain coming into a country like Sri Lanka, for example, which used to give free rice to its people.

[00:35:48] Alex Gladstein: Now is giving free rice to your people a good economic idea? No, probably not. But you know, you have a colonial power coming in, or a former colonial power coming in, and they give all kinds of free crap to their people. Not only do British enjoy free healthcare and all this other stuff, but a lot of their agricultural policy and stuff is, is basically subsidized by the government.

[00:36:07] Alex Gladstein: So you have a total hypocrisy. You have a government that uses a lot of central planning to protect its economy, coming into a poor country and saying you can no longer do the same thing. And on top of that, you have all the policies that that Bitcoiners would, would find, you know, horrifying, like, you know, again, raise taxes, raised interest rates, currency evaluation, et cetera, et cetera, et cetera.

[00:36:25] Alex Gladstein: So essentially the structural adjustment policy was meant to squeeze the poor country and to to reduce consumption. At the, at the prioritization of exports. So when we go back to those numbers from Bangladesh, now that we know this, we’re looking at, oh, like there’s a lot more exports happening, there’s a lot more shrimp things sold.

[00:36:42] Alex Gladstein: Well, what you don’t realize unless you dig into it, is that at the same time, there is a tremendous amount of, of debt being incurred and the debt service is just getting bigger and bigger and bigger. So for example, in the Bangladesh case, I just want to, because I’ll stop here.

[00:37:01] Preston Pysh: What I think what people don’t see is the, is how many times the debt keeps getting rolled over.

[00:37:07] Alex Gladstein: So it’s almost, first you had 10 structural adjustments. Yeah. Again, 10 times the government took, got a bailout essentially, and then agreed to restructure its economy by the IMF. Between 72 to today, there’s 10 times this has happened. So the debt, the foreign debt has gone from 140 million in 72. To, to almost a hundred billion today, almost a hundred billion.

[00:37:31] Alex Gladstein: So yes, on one part of the balance sheet, you’re seeing, you know, more profits from exports. But what you’re not seeing, if you just look at that, is that a country is slipping further and further and further into an inescapable debt trap.

[00:37:45] Preston Pysh: And dependence on foreign, on foreign imports for most total dependence on foreign imports.

[00:37:50] Alex Gladstein: Yeah, so, so these, these governments, they were directed to, to focus on things like shrimp farming so that they could earn more hard currency. Remember these, these countries can’t do what the US does. We can just print our Fiat reserve global currency and buy whatever we want. But if Bangladesh wants to buy a tractor in the open market, they can’t use their fiat currency.

[00:38:09] Alex Gladstein: It’s not convertible, it’s not, you know, convertible worldwide. So they, they have to get hard currency to buy that stuff. Oil, even, same thing, wheat, whatever, like to buy stuff on the international markets, they can’t use their own currency. They have to, they have to generate hard currency through exports to do it.

[00:38:25] Alex Gladstein: So they’re directed to generate more hard currency through exports so they can pay back the debt service, the debt service. That’s the number one line item of most of these poor countries when they sit down to pay their bill every month as a nation, it’s debt service. Now, this wasn’t the case 70 years ago.

[00:38:39] Alex Gladstein: This is not natural. This is like the-

[00:38:42] Preston Pysh: The chart you have on is crazy in the, in the article.

[00:38:45] Alex Gladstein: Yeah. Yeah. No, and we’ll, we’ll, we’ll get to that. But the point is that the income is not used to enrich the nation. It’s not used to invest in infrastructure for the people. It’s not used to raise living standards and become more prosperous.

[00:38:59] Alex Gladstein: It goes to paying back debt to foreign creditors. Number one, it goes to usually historically military stuff like these dictators were armed to the. It goes to all kinds of graph to corruption. I mean, some of these dictators were notorious for taking 20, 30% off the top of every loan they would receive.

[00:39:16] Alex Gladstein: They would build palaces, have tigers and lions. Pets have 50 Mercedes, have yachts castles in Spain, like the craziest corruption you’ve ever heard of. And also it would be used to put down dissent. It would be used to build a big repressive police force because they didn’t want people protesting against it.

[00:39:33] Alex Gladstein: And you know, again, you had this little dance between the IMF and World Bank where the bank and the fund and their creditors, which were essentially G five, like America, Japan, France, uk, Germany, they were making money and they were like really benefiting from extending these loans and the local dictators.

[00:39:50] Alex Gladstein: They were delighted to take the. Because who knows, they probably weren’t even going to be around when the debt had to be repayed, right? So the people who got screwed were the lower and middle classes in these poor countries in the third world developing world. I mean, they, they were the ones who paid the price, but they had no voice.

[00:40:06] Alex Gladstein: So again, that’s why the system keeps going and going. So you literally have a global debt Ponzi bubble that’s happened here, and the debt is exponential. So, so just for example, the debt incurred by, you know, these, these foreign countries is, is absolutely astounding. I mean, again, you, you go from, you know, a couple tens of millions of dollars of debt in some cases to, you know, hundreds of millions of dollars of debt.

[00:40:39] Alex Gladstein: So, I mean, some of these numbers are, are probably going to shock people. The, the external debt of developing countries since 1970 has increased from 46 billion for all of them combined in 70 to 8.7 trillion. Okay. So they’ve paid 4.2 trillion on interest payments to loan. Okay.

[00:40:55] Preston Pysh: You know, and then there’s one stat that those numbers are so high, I don’t think people can even wrap their head around how high.

[00:41:00] Alex Gladstein: I mean, it’s, it’s, it’s a little intense, but one part of it that’s incredibly difficult to understand is the fact that they kind of like approximate if you, if you think about the Marshall clan, like, which, which helps rebuild Europe during, during World War II, right?

[00:41:22] Alex Gladstein: So you have the Marshall Plan, which you know, was the equivalent of about a hundred billion dollars, I believe today. Right? So when you go ahead and look at the numbers for developing countries. It’s, it’s totally insane. So it’s basically when you add up all of the flow of resources from poor countries to rich countries, from 1960 to 2017, it’s 62 trillion.

[00:41:52] Alex Gladstein: So that’s 620 marshal plans. So I think that the really big penny drop moment you realize is that the structural adjustment policies and these really engineering of these economies result in a reversal of the resource flow that you would assume, like we’re all brought up to believe. Kind of that like, you know, rich countries donate and they do charity and they help out the poor countries.

[00:42:15] Alex Gladstein: Yeah, that’s not true. What’s actually happening is each year more than at this point by today, more than each year, more than 2 trillion comes back to us. So for example, in 2012, developing countries received 1.3 trillion. That’s all income aid investment, but 3.3 trillion flowed back out to rich countries.

[00:42:36] Alex Gladstein: So, essentially, you know, like in any given year you got developing countries sending like 2 trillion more than any receives the rest of the world. So this is them subsidizing our way of life, right? This is them supporting us. And I just don’t think the average person in the west understands that. And the actual like quantification of what that is is pretty jarring as well.

[00:43:00] Alex Gladstein: Like the drain itself. Like it’s partly stuff and it’s partly labor, right? So in 2015 the drain was 10.1 billion tons of raw materials and 182 million person years of labor. So that’s 50% of all goods and 28% of all labor used by developed countries was drained from poor countries.

[00:43:24] Preston Pysh: So again, like that’s, and it’s, and it’s for mono crop type things.

[00:43:30] Preston Pysh: If you’d go into one of these countries, and I want you to frame how many countries we’re talking about next, but if you would go into one of these countries, sure. It would be almost like a plastic kind of economy. Like here they are, they’ve got this one export or two exports that have been basically planned for them with a loan and a, and a quote unquote gun to their head that they have to kind of go down this path.

[00:43:59] Preston Pysh: because if they don’t, they’re going to go bankrupt, but here’s this money, so you might want to start moving out on this. And so they, they build this whole infrastructure around this one thing and then they become dependent on everything else. And I think that that was the thing that I took away from this that was just kind of mind blowing for me as I’m reading scenario after scenario and example after example of how this is set up.

[00:44:22] Preston Pysh: Sam, did you have anything else that you wanted to point out on, on that particular. Kind of topic before we move on to the

[00:44:29] Sam Callahan: Yeah, no, I think it’s just so important what Alex said, what happened in the eighties with the World Bank and the IMF during the Latin American debt crisis of how these loans started to, it basically changed from like project based with the World Bank to influencing the policies of these governments and how wrong that is.

[00:44:48] Sam Callahan: So you have this international organization who’s influencing these sovereign governments and telling them what to do, and they’re basically holding the money away and they’re in des, they’re in desperate need of these funds at this point. So they’re basically negotiating with a gun to their head, essentially, and they’re saying, oh, we’re not going to give this to you unless you do this, this, this, this, and this.

[00:45:09] Sam Callahan: And what they’re telling them to. Is not actually good for their local economy. It’s only good to benefit the multinational corporations as well as the, the foreigners, right? So they’re trying to open up their economies to allow foreigners to come in and buy things really cheaply. And so that’s when things really started to change when these, the World Bank and the IMF in the eighties started to influence policy and basically push these neoliberal policies on these developing nations.

[00:45:38] Sam Callahan: And so I, I just think that’s such an important point because it kinda led to all these other distortions and these developing markets and all of these problems, and all of these riots and the amount of poverty that they cause. It was just tremendous.

[00:45:52] Alex Gladstein: Staggering. Staggering. Yeah. I have a couple, a couple quick points.

[00:45:58] Alex Gladstein: You know, we’re, we’re working through a really large quantity of information here. So I, I, I appreciate the patience of the listener, but uh, we’re trying to hit the highlights here. But a couple, couple themes that I think are really important before you move on. Credit. Like when we think of development, economics and aid and assistance, I think people forget that alone has to be repaid.

[00:46:18] Alex Gladstein: P and i like, like the borrower has to pay back more than they got. Right. And when you look at like the, I have a chart in, in an essay that’s like taken from a book from the seventies and it’s like an innocuous chart. It’s just trying to show the life cycle of a World World Bank loan. And what you see is that after years, yeah, you’re in the black, like you’re getting the money, you’re getting disbursement, right?

[00:46:37] Alex Gladstein: And then all of a sudden, like for the next 20 years, the net resource flows like really deeply, sharply negative. Right? So it’s, because these were high interest rate loans, like INF loans were typically short term, two, three year loans that were very high interest rate. And yeah, like the loan was meant to be a short term thing.

[00:46:53] Alex Gladstein: And then what ends up happening is these, these countries kept asking. Like a rescheduling, a rescheduling, a rescheduling. And then the World Bank loans were, were, were longer loans. So you ended up having this debt pile that just gets bigger and bigger and bigger and what really like helped the curve go exponential.

[00:47:10] Alex Gladstein: And it’s a good, kind of like, addition to the WTF happened in 1970 website. All of this, like the world, the external debt of third world countries really starts to go exponential after that. So yet another thing that changed when we went into the full fiat, you know, world, but the, the petro dollar system is, is actually really key here, which I, which I was interested to learn about.

[00:47:30] Alex Gladstein: I kind of knew that a little bit. But diving into the details of it was interesting. Like basically like these countries were met with offers to take capital from western banks that had been stuffed with money from petro dollar earnings from the OPEC nations. Like the, these OPEC nations were recycling their money into Western banks, like their profits.

[00:47:51] Alex Gladstein: And those banks had to do something with that money. And they found willing borrowers all across the third world, all these military dictators, like almost every military, almost every government in the Middle East was a dictatorship. Almost every 18 outta 21 countries in Latin America at the time were dictatorships.

[00:48:07] Alex Gladstein: Like almost all the countries in Africa were dictatorships at the time south, so state Asia, et cetera. So they went to these dictators and dictators again, were delighted to take the loans. Delighted. And you also had cheap borrowing in the mid seventies, as we know, kind of like, you know, negative real rate type stuff.

[00:48:26] Alex Gladstein: And the head of the World Bank, Robert Macnamara, he was like all about just like more and more and more and more lending. Like they kind of realized that there’s no way these poor countries could pay back the debt except, unless with new debt, right? Like the Ponzi really started to emerge. So there’s some numbers I have in the essay that are, that are staggering, but basically like the total amount of lending even from, not only from their bank and the fund, but also from private banks to third world in the late seventies and early eighties when it was totally exponential.

[00:48:52] Alex Gladstein: And it is sort of like, it’s sort of like thinking about the subprime crisis. Like you had all these like small banks in America, in the Midwest making loans to like random countries in Southeast Asia. Like it was completely ridiculous. Like there was a huge bubble in this, in this area. And it burst. It burst really badly starting in 1982 when Mexico said it couldn’t pay any of its debt anymore.

[00:49:16] Alex Gladstein: Now that decade was, as Sam mentioned, you know, you called the Latin American debt crisis, third world debt crisis is. It’s probably better for us because it also included Africa. But basically like, I mean you had, again, the cost of capital skyrocketing after all these, all these countries had been encouraged essentially to borrow like crazy amounts of money.

[00:49:39] Alex Gladstein: And these dictators were totally fine with it. They never asked the population ever, they were never consulting, you know, the people who’d actually pay the cost Right. Of these loans. And this bubble started to pop and that was bad because the western banks who had made the loans did not want their balance sheet affected.

[00:49:56] Alex Gladstein: So the right thing to do would’ve been to let the debts basically expire. Would’ve been to, would’ve been to just let these countries go bankrupt. Like bankruptcies is a really healthy part of capitalism. Like it would’ve been a healthy thing to like let them go bankrupt, restart, or right off the debt.

[00:50:14] Alex Gladstein: And I, that was all what we call odious debt. Like, you know, it was contracted illegally, like-

[00:50:18] Preston Pysh: Get the bad actors. That’s that. Put all of this into play out of leadership role.

[00:50:24] Alex Gladstein: Yeah. In a free market system. And if they went bankrupt, people would overthrow the, the guy and you’d have someone else come in and you’d start over again.

[00:50:30] Alex Gladstein: Problem is the western banks didn’t want their assets on their balance sheet. These loans, which were assets on their balance sheet, right. They didn’t want those on zero. So they would push and bank in the fund as a system would push to bail out these countries. So you had these countries which had no business getting bailed out.

[00:50:46] Alex Gladstein: There was no economic sense to doing this. Mobutu in Zaire in Mexico. I mean, these guys for crooks, Marcos and, and Philippines, they stole unbelievable amounts of money from their people and from the world. They would just get bailed out over and over and over and over and over again. Suharto Indonesia. So, you know, you had a machine where like the creditor didn’t want to stop and the borrower didn’t want to stop.

[00:51:10] Alex Gladstein: It’s almost like it’s, I I use the, the, the kind of metaphor of a drug addict and I think. It’s really fitting, like basically the, the bank and the fund are drug dealers and the, the, these sort of dictatorial countries taking the loans or the addicts and debt is the, is the drug. And you know, there’s just no incentive for anyone to stop.

[00:51:32] Alex Gladstein: All the incentives are just to keep going, but if you want to heal and you want to get better, you have to go to rehab. Right. And, and there’s just no way in the existing paradigm for that to happen. Like, again, as we’re talking about, you know, it’s not like things got better after the eighties. We spend a lot of time talking about the seventies and eighties, because that was kind of, you know, I think when a lot of the, like death and destruction was really at its peak in many ways.

[00:51:55] Alex Gladstein: But the debt has gotten worse. Exploded. Yeah. These loans, like, I mean the largest loan ever was 57 billion from the IMA to Argentina just four years ago. Just four years ago.

[00:52:08] Preston Pysh: I mean, you bring it up, it is a windfall for dictators and, and for bad actors. This is a wind like,

[00:52:15] Alex Gladstein: They’re crushing. Well, what’s funny is when you look at what’s really, you can go and look at IMF is very opaque about a lot of things, but what it’s transparent about is that there’s a website where if you just Google like IMF history, Argentina, IMF history, Bangladesh, it just shows you quickly every single loan.

[00:52:29] Alex Gladstein: And what you realize is that the loans get bigger over time and all they’re doing is just paying back the other loans. Yeah. So the 57 billion from Argentina paid back all the loans that the dictators had borrowed in the seventies and eighties and wiped this like clean and then all, and then, but after that there’s like 30 billion of new debt.

[00:52:51] Alex Gladstein: So even more debt than they had before. So the debt is, it’s just Aon scheme. I mean, the debt is literally just going to pay back the old debt every single, it’s crazy. They go back to taking

[00:53:03] Sam Callahan: out another loan. It comes with more conditions. So each time they have to come back, it says, okay, you can have this loan again.

[00:53:11] Sam Callahan: But you have to cut healthcare. You know, cut subsidies,

[00:53:15] Alex Gladstein: cut, you know? No. And again, the dic, the dictators didn’t care. I mean, they were happy to fleece the country and sell off the nation. Well, there’s a lot of corruption and embezzlement,

[00:53:24] Sam Callahan: but I’m just saying in general, when a country has to get another loan, it comes with new conditions each

[00:53:29] Alex Gladstein: time.

[00:53:30] Alex Gladstein: Each time. Oh, yeah. It’s not like the IMF and World Bank have been charitable, like the conditionality guys has, has, has risen. So the average loan now has like dozens of conditions attached to it. And that’s, that’s gone gotten worse. Worse and worse and worse over time, which makes the economy

[00:53:45] Preston Pysh: more plastic.

[00:53:46] Preston Pysh: I’m using this term.

[00:53:48] Alex Gladstein: Yeah. More monoculture, more plastic, more export driven. Yeah. Less about sustaining and prospering locally, and more about subsidizing civilization elsewhere. And these loans have just gotten so, so big. I mean, the loans in the eighties to Latin America were big. The loans to Asia during the financial crisis in the, in the nineties were even bigger.

[00:54:11] Alex Gladstein: And the loans, ironically to Europe in the European debt crisis last decade were even bigger. So like you look at like the total, like in, in, you know, let’s say 20 $10, these loans in Greece and to Poland and to Iceland. I mean, they were even bigger than the loans given to, you know, in some cases, whether it was, you know, Indonesia and Thailand or Mexico, and the same playbook applied.

[00:54:35] Alex Gladstein: They would, they would go to Iceland or they would go to Greece or Spain and just say, you guys have to, you know, austerity, you guys have to adjust. And this just continues. And it, and it continues. And it continues. And no one’s ever done a reckoning of like, what’s been the actual social impact of this over these decades.

[00:54:50] Alex Gladstein: And I was looking at some numbers since Tim claims by some people, and I, I try to present them here, but like in this piece, but especially in the seventies and eighties, During a 20 to 25 year period of time, you, you had whole parts of the world contract. So their populations kept growing, but the economy was shrinking.

[00:55:07] Alex Gladstein: So the GDP per capita income was shrinking dramatically. In some cases 20, 30%. And you know, what ends up happening is like the, the amount of like time it takes you to earn a certain amount of calories in these countries was, was going up dramatically. So the amount of time you had to work to earn a thousand calories in Jamaica, in Brazil, Nigeria between ni literally between the sixties and the eighties went way up.

[00:55:35] Alex Gladstein: Like you had to work more to get the same amount of food so that that’s like, we can throw aside all of the like fiat currency stuff, because it was all going crazy. But the, you know, in terms of goods and services, your time was getting stolen. Like there was literal wage deflation and that was the whole point of the system.

[00:55:51] Alex Gladstein: And I argue like that was what colonialism needed, that people in the west realized that their economies, they would get really high inflation unless they had cheap import, cheap external, you know, external inputs from elsewhere. Like those can subsidize what we do over here and it could keep our costs down.

[00:56:09] Alex Gladstein: So colonialism is all about getting cheap goods and cheap labor abroad to keep inflation down in our countries so our rulers didn’t get overthrown. Okay. So that’s what this is doing. It’s, it’s like over the decades it was, it was keeping our costs down at home. At the expense of wages in, in the, in the poor countries.

[00:56:28] Alex Gladstein: This is how the system worked. And when you looked at the actual toll, like let’s say the death toll, there are studies showing that for every 2% in in decline in GDP, you have a 1% increase in mortality rate. Something like that. I mean, this is like a, based on a study on Mexico, which is sort of typical country that went through a lot of structural adjustment.

[00:56:48] Alex Gladstein: I mean, when you take that number and you realize that some of these countries had a 10, 20, 30% decline in GDP over a decade, two decades, I mean, we’re, we’re looking at tens of millions of killed by banking fund policy. And look, the reality is that no one’s ever going to go to jail. No one’s ever going to be held accountable.

[00:57:05] Alex Gladstein: It was, you know, quote unquote in the past, even though some of the stuff’s still happening today. But I, I think it’s important that we just realize like the toll of this, like giant. Debt Ponzi bubble, like it, it’s going to keep going until something changes. Right. And then maybe, maybe, maybe we conclude with what that something might be, which is probably obvious at this point, given, given that your listeners probably know who I am, what I’m interested in.

[00:57:27] Alex Gladstein: But I just think that unless there’s something structurally different Yeah. In the way that the, the international economy works, this thing’s going to keep going.

[00:57:36] Preston Pysh: It’s a function of fraction of, of a fractional reserve system as far as I’m concerned, that you have to keep growing the debt. You have to keep growing the credit in these fractional reserve systems.

[00:57:48] Alex Gladstein: One of the, you know, look, I was going to say, president China has copied IMF World Bank, they have their own thing, but it’s not nearly a successful because they don’t have the World Reserve currency. They can’t just print money to bail out countries. So when China goes in and, you know, gives money to Sri Lanka and then Sri Lanka goes bankrupt, like they have to basically pull out, they, they have cut, they have to take their losses and get out of there.

[00:58:09] Alex Gladstein: We don’t do that. The IMF and the World Bank never take losses in need. We just give another new result roll. We do a bail it out. Yeah, because we can print the reserve currency. And if you notice, again, this is exactly sort of timed with the collapse of the gold standard, the collapse of colonialism and the rise of the post 71 fiat system, the post 71 political economy.

[00:58:30] Alex Gladstein: All this is connected. And ever since then we’ve had this growing debt bubble. And you talk about bubble, the subprime bubble, the stimulus bubble. These just pale in comparison to the size of the sovereign debt bubble that has been created by the bank and the fund. I mean, we’re talking trillions and trillions and trillions of dollars of loans that were made and they’re all, again, they’re odious debt like ods.

[00:58:52] Alex Gladstein: Debt was invented by the US a hundred plus years ago during the Spanish American War when we defeated the Spanish. American Courts said to the Cuban people, you don’t owe the money that the Spanish borrowed because they were subjugating you. And, and that, that, I resonate with that. That to me is legal.

[00:59:09] Alex Gladstein: That’s moral. I think those debt should be written off because they were illegal. Like those banks that let, let the Spanish borrow from them. Screw those people like that. That’s, that’s awful in my opinion. Now, I know some people find that controversial and ods debt is controversial, but the reality is the bank and the fund never followed this legal precedent.

[00:59:28] Alex Gladstein: So again, you’ve got people in the Congo still paying back debt that Matu took out in the eighties. You’ve got people, yeah. Again, in Argentina, still still paying the price for stuff that military dictators did in the eighties. And there’s never been any forgiveness to this debt, even though those people never agreed to take those loans.

[00:59:45] Alex Gladstein: So again, you know, So much of the, of the sovereign debt bubble is illegitimate. Like these were loans and contracts made without the consent of the people. And that’s, you know, as a human rights activist, that’s where I get, you know, obviously really fired up. You got a

[01:00:01] Preston Pysh: quote in the article here that I think captures that last point really well.

[01:00:06] Preston Pysh: It says, the IMF they say has rarely met a dictatorship that it didn’t like. Let’s move to, I, I’ve got one more theme that I want to kind of hit before we talk about the solution here. You, you hit on this a little bit about how detached the planners are from the, the IMF and the World Bank as they’re coming up with their structural adjustment things that are tied to the.

[01:00:33] Preston Pysh: And this is the quote from your article. You say, bank and fund policy is forged in meetings in lavish hotels between people who will never have to live a day in poverty in their lives. Glitz argues. Modern high tech warfare is designed to remove physical contact. Dropping bombs from 50,000 feet ensures that one does not feel what one does.

[01:00:55] Preston Pysh: Modern economic management is similar from one luxury hotel. One can callously impose policies about which one would think twice if one knew the people in the lives that they were actually destroying. I love the analogy. I think it is so just spot on. To, they’re looking at it from, okay, what does the world need?

[01:01:19] Preston Pysh: Right? Oh, we need shrimp out of Bangladesh as going back to that example, so let’s go down there. Let’s give them a bunch of money, and then let’s force them to just start pumping out more shrimp than they’ve ever thought that was imaginable, right? The whole ecosystem that’s around that idea and how detached those planners are from what’s actually happening on the ground from those citizens.

[01:01:44] Preston Pysh: I could just imagine taking a hundred of those citizens and lining them up and after they’ve experienced this for 10, 10 years, 20 years, and asking those hundred people, was this helpful? Has this improved your country? What would those hundred

[01:02:00] Alex Gladstein: people say? No, and I’m glad you mentioned that. I mean, what we think about the Bangladesh example, but really what we have here is like a structural.

[01:02:09] Alex Gladstein: Issue where dominant countries are able to literally get the poor countries to pay for the restructuring of their own economies. Yes. To benefit us at their expense of their people. That’s really what it ha what’s happening here. And when it comes to what we call the development set, that’s like what, you know, that’s what the leadership of the bank and the founder called or sayin, Amus calls them the, the misery industry, which I thought’s really great.

[01:02:34] Alex Gladstein: I, I quote, I quoted it links from his, his, he has a wonderful chapter, chapter in the Theat standard about the misery industry, which I loved and I, I included here. But the reason why the misery industry can do what it does and, and you know, they sit the Wolf Bank and I quoted in nine headquarted in Washington.

[01:02:50] Alex Gladstein: They had these lavish conferences, you. Where they have champagne and caviar and million dollar meals and all this crazy stuff. First Class everywhere article, Christine Lagar was making 500 k a year tax free. Meanwhile, she was imposing structural adjustment on countries jacking up taxes for poor people.

[01:03:08] Alex Gladstein: I mean, it’s so crazy when you think about it that you’ve got the World Bank, which for a long time I, I wasn’t able to figure out if it’s still the case today, but in the seven, in the seventies and eighties and nineties, the workers who cleaned the toilets at the World Bank in Washington, who fled, who were in, in many cases, refugees who fled from adjusted countries, you know, they weren’t even allowed to unionize.

[01:03:31] Alex Gladstein: Okay. So the, the hypocrisy is just so stunning. And you’ve got like these people who are living the life. I mean, one of the reasons why there’s so much inertia here is like working for the IMF and World Bank is awesome. I mean, they used to get free upgrades to the Concord. They would get five star hotel visits and so you have the Penality of Evil thing.

[01:03:52] Alex Gladstein: These people, they don’t think they’re evil. They think they’re helping out the poor countries. Yeah. Like they, they probably don’t even know this. It’s like they haven’t even probably zoomed out to think about the meta resource strain thing. Like that’s not something they probably do. They’re just looking at what’s in front of them.

[01:04:06] Alex Gladstein: And they’re just like giving out money to poor countries and they, they, they’re not thinking about the fact that the p and i’s gotta come back. One of the other reasons why there’s inertia, I really wanted to mention this, is that the structure of the fund in the bank is basically a World War II structure.

[01:04:19] Alex Gladstein: Meaning the votes, meaning how are they controlled? The US still gets 16% of the vote, essentially at the, at the bank and the fund. So that’s just enough to veto any decision. So you need 85% to, to do big, big changes. So the US can veto any big change in the bank or the fund. And when you add up its allies, it can have control over any vote.

[01:04:39] Alex Gladstein: And I thought this was crazy. Some of these disparities between like economic power and population versus how much, how much votes they actually have. So Britain has more votes than India today. Britain has more votes than India, despite having 20 times fewer population equal, and the smaller economy. By this point, I mean, India’s going to be the third largest economy in the world shortly sw 8 million people.

[01:05:05] Alex Gladstein: Has more votes than San Indonesia, Bangladesh, and Ethiopia combined, despite having 90 times fewer people. Okay. You know, voting rates has, it’s, it’s, I mean, Italy has the same as China. Yeah. You know, you know, et cetera, et cetera. We could, we could keep you, we could keep going down the, the, the list. The point is that this, the, again, like the people who are getting screwed don’t really have a voice.

[01:05:29] Alex Gladstein: And that’s true at the micro senses. It’s, it’s true at the macro sense. And I, again, I really think that it’s all about changing the paradigm. Now, the people who criticized the bank and the fund over the years, their, again, their solutions largely were Marxist ones, which, you know, most of us here are listening probably are like, that’s obviously a bad idea.

[01:05:49] Alex Gladstein: Like, they wanted to nationalize more industries, give more power to local leaders. And I’m sitting here looking at the fact that, well, when you had 18 to 21 dictators in Latin America, leaders in Latin America, or corrupt dictators, how’s that going to help anything? Like, that’s clearly like, that wasn’t a good idea and.

[01:06:04] Alex Gladstein: There wasn’t really a better, I mean, you know, what I would say is, let’s say pre getting to Bitcoin and changing the monetary paradigm, I, I do like the idea of her writing off some of the ods debt. I think that that’s interesting and I like the idea of abolishing the World Bank and IMF, but these are obviously, like, these are unrealistic, like these things are, they would help, but they’re not going to happen, right?

[01:06:23] Alex Gladstein: because of the cause of the incentives of the system as we’ve described. So the, there, there’s no one, there’s no like counselor who’s going to come in and sit down and have a family talk. That’s just that a person doesn’t exist in this metaphor. So when we think about maybe Bitcoin changing the monetary paradigm in the future, and, and Jeff Booth and, and Safe both really helped me think through this.

[01:06:44] Alex Gladstein: Like, and I’m grateful to both of them for their time, for helping me think through this, but basically you, you have a situation where people are starting to go to the Bitcoin standard and the worlds start to change in that way. These ifi, the bank and the fund, let’s say they continue doing their loans well at some point.

[01:07:01] Alex Gladstein: These countries, again, are going to default, right? And then all of a sudden they won’t be able to have the money printer machine to, to bail them out. And they’re going to have to go, whoa, wait a second. Like, this isn’t working. What do we do? And, you know, maybe either if they continue to exist at all, like, I mean, the one one theory is they, they just hold, but, but if they stay in business and, and actually want to actually help, want to do what they say and their mission they’re supposed to do, maybe they change more to co-investment instead of loans at high interest rates and they’d have skin in the game and they’d actually care about these, about these enterprises being sustainable, these projects and these countries.

[01:07:40] Alex Gladstein: So I think that’s one really interesting impact that could happen. Potentially. There is a, a ship. The other thing’s just more, more kind of meta. It’s like, today currency’s just segregated. So you have all these poor countries with these horrible fiats that can’t, they can’t print the fiat to buy stuff.

[01:07:58] Alex Gladstein: Yeah. So they have to go into this. They’re sucked into this thing of, of being an export driven economy and selling non edible crops that people can’t even eat to, to rich people out here so we can have our tea or whatever that sort of is because of the segregation of currencies. Yes. If we have one world currency where we’re all using the same currency, then there is no global canon effect.

[01:08:20] Alex Gladstein: Like we always talk about canon effect in the Bitcoin ecosystem. Right. We, we like to talk about it a lot and we’re usually referring to the United States, wall Street, et cetera. There’s also a global canon effect, the global canon effect to which countries in the poor countries, DMF and the World Bank get to borrow from the hose of the, of the fiat hose.

[01:08:38] Alex Gladstein: They’re sitting there sucking on it. They get the cheap capital. And they borrow the cheap capital and they sell that capital for more to the poor countries. They actually make money this way. This is like something I was kind of shocked to learn. And these aren’t charities, these are loan loan giving banks.

[01:08:53] Alex Gladstein: You know, they have a business model and they make their money off the cancel on effect. So if you no longer have the cancel on effect and there, there is no like a benefit to being in DC like you, you’re not going to get cheaper dollars that way. Yeah. Like you can today and the system starts to shift a little bit and, you know, maybe it becomes more appealing to hire those people in, in Nigeria if, if, if there is no like kind of way to exploit the, the, you know, the wage, the wage difference is so vast.

[01:09:21] Alex Gladstein: It’s, I the stat I got in my essays today, I mean the wage deflation thing worked. So the average worker in the developing world makes 20% of what the average worker in the developed world makes. That really, I think that that’s an arbitrary opportunity that closes in a Bitcoin standard. I mean, it doesn’t close completely, obviously, but I think it closes pretty significantly.

[01:09:42] Alex Gladstein: I mean, would you not agree? I totally agree with that. We had one monetary standard for the world. You wouldn’t have these crazy disparities in monetary inequality. You bring this up in

[01:09:51] Preston Pysh: your article where it’s, it’s always a battle to find the sound as currency so that you can repay the debt, because if you’re trying to do it in, in local currency terms, it’s just like you, you earn it and it’s just withering away because the currency’s just so weak and so they’re, they’re, they’re constantly trying to scrounge for a sound currency with Bitcoin.

[01:10:13] Preston Pysh: I think here in the future, it’s going to be just so readily accessible for everybody. I think it already is readily access. And as you go through these boom cycles, and hopefully we start to see some type of price stability here in the coming 10 years where it’s not so volatile to what everybody’s expenses are, denominated in it, it really drastically changes things, I think for so many of these nations.

[01:10:39] Alex Gladstein: Well, well it’s kind of a two-face thing, right? Like the volatility could be here for a long, long time, right? We know that. But in the meantime, because this is just speculation, like we don’t really know and, and safe is cautious about that. You know, I was talking to him about mining and a little cautious about that.

[01:10:54] Alex Gladstein: I was like, well, wouldn’t it be cool if these countries can just convert their energy resources to the, to the reserve currency? And you know, I think, I think, I think we just need to be a little cautious on that. I think it’s an interesting idea. But what we know is that today, Bitcoin is a micro tool for the individual to escape financial repression.

[01:11:11] Alex Gladstein: This is inarguable, right? So this is just going to keep growing as a phenomenon over time, and then maybe eventually, as you say, once. Bitcoin itself maybe becomes, you know, sort of stable to to, to overtake some of these fiats in terms of people in business and in finance wanting to actually use it as a unit account.

[01:11:31] Alex Gladstein: Then it starts to break entire nation’s free from, from economic oppression. That’s, and that’s just like really heady, super exciting. And, and you know, it is, it makes all the sense in the world, these countries are going to be the biggest countries in the world. Like Nigeria’s going to be bigger in the United States, you know, in several decades.

[01:11:49] Alex Gladstein: Like, they’re going to have more manpower, they’re going to have a lot of talent, and, and they’re being held down. I mean, they, they really are being held down. You know, I, I always think about the fact that, you know, the, the, the bank and the fund are seen as, you know, there, there are a lot of people who, who, who see the bank and the fund.

[01:12:11] Alex Gladstein: I mean, some people think they’re positive, some people think they’re, well, you know, there might be some nasty stuff, but it’s necessary. And some people are little skeptical, you know, a lot of the libertarian analysis of the bank and the fund is basically like, it’s a waste. Like, you know, republicans in the nineties were like, let’s close it down.

[01:12:24] Alex Gladstein: It’s like waste taxpayer money. Mil it mil. I think Mil Freeman said something similar, but the, but their critique was mainly that it was like a waste or it was mismanaged or corrupt. I see. I don’t think that that’s, I don’t buy that. I don’t, I don’t think that this is a mistake. I don’t think that, when we talked about the, the resource flow earlier, since 1982, the flow of resources has permanently been in the direction of or to Rich.

[01:12:50] Alex Gladstein: I don’t think that’s a mistake. I think these institutions were intentionally designed to create dependency on us as wealthy and to change their economy so they couldn’t stand up on their. And, and that they would continue to provide like depressed wages so that we could have the way of life that we want.

[01:13:09] Alex Gladstein: As George HW Bush said that, I quoted from him like, you know, we don’t negotiate our way of life with anybody. Right? And I think that it’s, it’s something you can only appreciate when you really zoom out. Again, I’m not, I don’t think there were like individual conspiracies here, but when you add it all up, you can’t argue with the outcome, which is again, poor countries subsidizing the way of life and rich countries.

[01:13:32] Alex Gladstein: And the tool that was used to do it was debt extended through the bank and the fund. So if the currencies equalized in the future and there’s no more bailouts, then you can’t do structural adjustment. And that’s what Safe said to me. He said, you know, today it’s easy. Brazil wants 30 billion, which I think is essentially what they got a couple decades ago.

[01:13:54] Alex Gladstein: You know, ones massive bank IMF, bailouts. It’s a political decision. Literally. It’s a political, it’s not, it’s not economic decision, it’s a political decision. Congress can just snap its fingers and boom, we’ve got $30 billion. Like we send it through the, the fund and it goes, and we, and we make money off that, by the way.

[01:14:10] Alex Gladstein: Right. But but in the future, if it’s a Bitcoin standard, it’s like, you and who’s Bitcoin is going to bail out Brazil $30 billion. No, it’s not going to work like that. Like that’s, it’s going to have to be a business decision. Like these, the development banks and the IMF are going to have to actually think more about their, like, sustainability.

[01:14:28] Alex Gladstein: Like they’re not going to be able to just extend loans over and over and over and over again to grow up dictators who are buying palaces and stuff. Like, that’s not going to fly. The people making those loans are going to fired, right. The World Bank is not going to go and build these enormous white elephant projects in the middle of nowhere that don’t help anybody, that all they do is help the creditor nation and snare the poor country in more debt.

[01:14:50] Alex Gladstein: Like, they don’t actually do anything if you, if you don’t have the bailout. That’s not going to fly anymore. You know, the reason why we have this massive global Ponzi debt bubble is because of what’s called the IMF put on sovereign debt. Like private markets know that they can make loans to these countries and they’re going to get bailed out.

[01:15:07] Alex Gladstein: They know that. And the companies working in these countries know that. So it’s almost like insurance on getting involved in these countries. And that is a political dynamic that is not a free market dynamics disa planned thing. Yeah. Disas, it’s, it’s, it’s imposed by violence. So essentially when you remove that from the equation, I’m not saying it’s going to be pretty, like, I think we need to understand that like, if this thing starts to unwind, it’s going to be brutal.

[01:15:36] Alex Gladstein: I mean, it’s going to be like going to rehab for these countries, but like there is no other way otherwise you die. Right? Like if you don’t go to rehab, you eventually die. Right? And that’s essentially what’s happened is you’ve had like loss of tens of millions of people over these decades. But if we can, if the system can change, like you can have a new, like you can have a new foundation like the, you know, bankruptcies can actually happen and western banks have no choice, then they’re going to change their policy and they’re not going to make that alone to Matu next time.

[01:16:07] Alex Gladstein: And, and if they actually care about helping the people in the Congo, they’ll find another way to help the people of the Congo. You know, I don’t believe it’s like, oh well then they’re all going to starve. No, I think people who actually do care will find a better way than to send a high interest, no strings attached loan to Matu in exchange for him promising to sell more rubber to, to Europe.

[01:16:27] Alex Gladstein: Like that. This is, that’s just not going to happen in a world where we have a different kind of monetary system. So I go through this really dark journey of doing this piece and I end up pretty optimistic because I really think we’re building something here in the Bitcoin community that that is, that’s going to help us fight back, if that makes any sense.

[01:16:45] Alex Gladstein: I love this chart,

[01:16:45] Preston Pysh: Sam, I don’t if, if, if you have a point here, go ahead.

[01:16:48] Alex Gladstein: But I, I want to throw out the No, that’s a good one. Yeah.

[01:16:51] Preston Pysh: real fast. Before, before Sam goes, okay. You have this chart in here and you’re showing Bitcoin ownership per capita versus countries that have taken, taken IMF, structural adjustment loans.

[01:17:06] Alex Gladstein: And I mean, the correlation is, it’s, yeah, no, it’s, it’s pretty awesome. Actually. Not even, it’s not even a subset. It’s literally just the countries in the world that have the highest per capita Bitcoin and cryptocurrency usage. It’s just that, like eight of the top 10 are countries that have been hammered by the IMF.

[01:17:22] Alex Gladstein: Yes. So the, the irony and in a way the cleverness of, of, I don’t know, satoshi in some weird way, is that the people who. Hurt the worst from the IMF and World Bank are the ones that are finding a way out, figuring out. It’s, it’s, it’s really fascinating. Again, it’s like Turkey, Argentina, Nigeria, you know, you look at these countries that got crushed so badly, they’re the ones who are, who were at least the people are finding a way out.

[01:17:48] Alex Gladstein: And that’s what’s so inspiring like about Africa. Bitcoin conferences is like traditionally, again, these people had no way out. They were stuck in the currency system. You had people, you know, in the cifa zone in West Africa, like they, they had no choice but to just take the 50% evaluation that the post in 1994, they didn’t, they didn’t have another option.

[01:18:09] Alex Gladstein: You know, today they have another option on their phone. They can opt out to a different system and I don’t know when we get the meta changes, like when we start to get the really big meta shifts, but the micro shifts are good enough. I mean, at least it gives individuals a way out. Sam, what was your thoughts?

[01:18:26] Alex Gladstein: Well, on that, on that

[01:18:27] Sam Callahan: point of the nations that have been, you know, hurt by the IMF the

[01:18:31] Alex Gladstein: most, I’d like to talk about El Salvador a little bit. No, line El Salvador’s

[01:18:37] Sam Callahan: a pretty interesting story about the IMF. So in 1982, the IMF gave a 57 million loan to them, and it was extremely controversial because usually the IMF has to act like they’re helping by like doing development work there.

[01:18:52] Sam Callahan: They’re going to do something that actually built up the economy. They act like it built up the exports. This was strictly during a civil war, and basically they picked a side and that IMF money was used to buy military weapons. So it’s extremely controversial. And so the money didn’t go to, but that’s more, that’s more traditional than you’d think.

[01:19:08] Alex Gladstein: I mean, that’s more common than, than you’d think.

[01:19:10] Sam Callahan: Well, but like this was like blatant, like they knew that it was going to help the Oh, yeah, yeah, yeah, yeah. This wasn’t, I know what you’re saying, but No, this was like a controversy at the time, and they used it, they didn’t use it for the development of El Salvador’s infrastructure, and a lot of it was used to purchase imports from US firms.

[01:19:26] Sam Callahan: So this is a classic example. It benefited firms like Proctor and Gamble and General Foods. . And so now you see El Salvador today and obviously with the Bitcoin and once they talked about the volcano bond, that’s when IMF started to really get scared, I think. Mm-hmm. , that’s when they started to really like attack them and they, they told them a warning.

[01:19:49] Sam Callahan: They’re like, you shouldn’t do Bitcoin. After they announced the volcano bond and then the El Salvador treasury minister said, no, inter, our national organization is going to tell us to do anything. We’re a sovereign nation. And so just recently they, they’re going to pass a bill to finally start this volcano bond.

[01:20:04] Sam Callahan: It’s been slower than people think. I think the macro environment turned and, and it’s probably a little bit more complicated than they thought launching one of these things. It’s really interesting because the World Bank and IMF basically have had a monopoly on the distressed sovereign debt market, which is I think part of the problem.

[01:20:19] Alex Gladstein: Yeah.

[01:20:20] Sam Callahan: And. So there’s only like three choices when a country like El Salvador wants to borrow money, they can go to Wall Street investment banks to the debt, but they have to take a hefty cut, like an underwriting fee they can borrow from the IMF and World Bank with all of those conditions that Gladson just talked about.

[01:20:36] Sam Callahan: Mm-hmm. . Or they can go to China and it’s kinda the same thing. Yeah. You’ve got critical infrastructure as collateral, and if they default on that, then China gets their critical infrastructure. Right. Wow. But now they can issue bonds on the liquid network and they can cut out those expensive middleman.

[01:20:51] Sam Callahan: They can keep a hundred percent of the proceeds and use it any way they want, and they don’t have to lose their sub sovereignty to the IMF or China. And so I think it’s a, a game changer. This idea of raising money on Bitcoin. So it’s just like another example of how Bitcoin could potentially take power away from these organizations.

[01:21:10] Sam Callahan: And it’s, it’s like a proof of concept. We don’t know how it’s going to play out, but it’s really, really interesting to think about how a, a nation can raise money with zero terms and conditions, use it however they want, and they can maintain their, their sovereign while they do it. So I, I’m very curious to see what it’s like.

[01:21:30] Sam Callahan: And, and so you talked about how the US like runs the IMF. It was really interesting that also that the Senate Foreign Relations Committee tried to pass this, this accountability for cryptocurrency and El Salvador’s act, the ACEs act to this love of that.

[01:21:45] Alex Gladstein: It’s really crazy because, you know, they’re saying it’s El Salvador adopting Bitcoin is mitigate potential risk to the US financial system.

[01:21:53] Alex Gladstein: El Salvador is a tiny country. And to think that that’s their excuse for doing this. And I think this is, you know, this is like a little bit tinfoil had, but. If the US runs the IMF and now they’re trying to push these ACEs acts basically require the State department to report on El Salvador’s adoption of Bitcoin.

[01:22:12] Alex Gladstein: You see how like this volcano bond, I think really spooked them because it basically allows sovereign nations to a skirt around them and, and they don’t like that. So I just wanted to add that, cause that just, I think it’s really interesting.

[01:22:26] Alex Gladstein: Yeah, I mean, I’ve been very critical of b for Freeman rights stuff, but I’ve always supported giving the IMF huge middle finger.

[01:22:33] Alex Gladstein: I love the volcano bond idea. You, I, I, it might get botched, but I, the idea is amazing and I, I love the idea of adopting Bitcoin as a, as a second currency. I think this is something. Is a huge challenge to the IMF system. Maybe, I mean, I don’t know, like, you know, I don’t want to sit here and we joke about Bitcoin fixes this, but like, I don’t really, I can’t think of really another way to really push back in an effective way.

[01:22:55] Alex Gladstein: But you, you’ve got these countries, all these poor countries have vast in, in any cases energy reserve, which they can, you know, they can essentially borrow against and, and get Bitcoin mining going and, and then, and then print the future reserve currency that way. And I think that that’s just a really great outcome.

[01:23:15] Alex Gladstein: Whereas before they would have to, you know, especially with renewable energy, I mean before they would have to basically borrow against forests and national treasures and deplete minerals and, and cut things down and destroy things. And here you have an opportunity to take the flowing water of these countries or the geothermal power of these countries and convert it to.

[01:23:39] Alex Gladstein: Whether it be, you know, debt financing, you know, powering debt financing or, or just straight printing reserve currency without permission of, of the great powers, I think is really cool. So I, I totally agree with you on, on all of that.

[01:23:52] Sam Callahan: I just think what you’ve said here is, it’s basically you can look at all of their decades of work and there’s empirical evidence.

[01:24:01] Sam Callahan: Now you can look at the outcomes. You don’t even have to think about anything else and just ask if they’re succeeding on their mission. Right. Their state admission, you know, I have a study right here from 19 97, 19 65 to 1995 is 30 year period. They looked at and 60% of these loans to recipient countries.

[01:24:19] Sam Callahan: In that 30 year period, the real per capita wealth decreased and 32 out of the 48 of the poorest countries, their economy shrunk by an average of 15% over those 30 years, and now they have massive debt burdens. And that’s just. That’s exactly what we’re talking about. They’re worse off after they get involved with these IEM at the world.

[01:24:39] Alex Gladstein: No, I mean we’re talking and again with 15% contraction of GDP. Okay, so with the mortality rate is going up seven point a half percent on a population of a hundred million people. I mean, you do the math. We’re again, we’re talking about the deaths of tens of millions of people. We’re talking about exponential debt that needs to be seen to be believed, and that is the outcome of the bank and the fund.

[01:25:01] Alex Gladstein: So I really look forward to dialoguing with some of these officials and I want them to explain themselves. I mean, again, I got into this because of the human rights stuff and, and I just couldn’t believe the affinity for not only dictators but colonialists. I mean the bank and the fund were funding all kinds of colonial operations in apartheid South Africa.

[01:25:18] Alex Gladstein: Rhodesia, the helping the Dutch put down the Indonesians in the in, in the late forties. I mean, from the beginning they were totally corrupt in this way. They, they, they’ve never asked structural adjustment. They’ve never asked for, by the way, free speech, human rights protections, a reduction of, you know, police brutality.

[01:25:37] Alex Gladstein: That’s never been part of the structural adjustment thing. And they claim that they can’t do that because they can’t get involved with the politics of the countries that they lent to. But they’re literally changing the lifeblood of the country. They’re structural adjustment. So the whole thing is just like total hypocrisy.

[01:25:52] Alex Gladstein: And now we’ve got the green colonialism thing where we as rich countries stole the fossil fuels essentially, or, or, or exploited at very cheap prices below market prices, the fossil fuels of these countries for decades, for a century, but certainly for decades. And use that to advance our civilization.

[01:26:11] Alex Gladstein: And now we’re telling them they can’t use their fossils. In fact, they have to use our windmills and solar that we make. Right. Or whatever. I mean, it’s, it’s crazy. So that’s the new, that’s kind of the new, that’s era of, of the INF and oil bank thing is like we’re trying to get them to reduce their energy consumption.

[01:26:30] Alex Gladstein: Again, you know, totally in line with, with the malus and nature of the whole thing since the beginning is like, you’ve got, you guys out there have gotta reduce your consumption in poor countries so that we can keep our quality of life here. And I just think that a lot of people don’t know this. They should reflect on it.

[01:26:46] Alex Gladstein: I, I don’t want to come off as like, look, I’m, I’m hugely grateful for Western civilization. I love individual rights and property rights and free speech and like, there are so many things to be proud of being an American and, and, and being part of this tradition. But we don’t think about the other half.

[01:27:02] Alex Gladstein: We don’t think about the fact that the reason we’re successful is not just the fact that we have free speech and democracy and property rights. It’s also because we stole the labor and wealth of poor countries for so many decades and, and used the bank and fund to do it. So I just think it’s a fair shake to, to acknowledge both and think about a world where we could, we could really focus on the former and get rid of the latter.

[01:27:26] Alex Gladstein: Like if we had a world where Jeff Booth says, we don’t have the words to talk about this word yet, world yet, cause we’ve never seen it before, but he calls it forced cooperation, where we basically be forced to cooperate with these countries instead of exploiting them. I just find that so people concept.

[01:27:42] Alex Gladstein: I love that. I, I I hope we can get there, man. I love that Alex.

[01:27:48] Preston Pysh: People need to read this because we, we were kind of jumping all over the place talking about, you know, the, the finer points of, of the article. I truly mean it. The, the way you laid this out was done in, in such a great way that it really walks the reader through and educates the readers.

[01:28:08] Preston Pysh: They’re going through it with example after example as the, as they go along the path. The name of the article is Structural Adjustment. How the IMF and World Bank Repress Poor Countries and Funnel their Resources to the Rich Ones. We’ll have a link to this in the show notes. Read this, share this, take this podcast, YouTube, or whatever, post it into every IMF, tweet that they, that they ever post online so people can hear the other side of whatever propaganda they’re pumping out.

[01:28:39] Preston Pysh: Because I think that the world needs to hear this story. I think people need to learn these facts and. Boy, oh boy. It’s exciting to, to think about what Bitcoin could potentially do here in the future for some of this stuff. And, and I love that quote that you just said with Jeff Booth about forced cooperation and what an exciting world that that leads us with.

[01:29:03] Preston Pysh: Alex, thank you for making time to come on the show. Sam, thank you so much for, for joining me in this discussion. Truly, truly amazing work.

[01:29:11] Alex Gladstein: Thank you so much, Preston, and my honor to be here and hope folks can read the article and learn something. I learned a lot, so I hope I can give back a little bit and help you all learn a little bit too.

[01:29:22] Preston Pysh: Sam, give, give people a handoff to, to yourself. Both of you guys, give a handoff to your Twitter feeds or anything else that you guys want to highlight.

[01:29:29] Sam Callahan: Yeah, I’m the lead analyst at Swan Bitcoin. We’re an international Bitcoin financial services company, so check us out at for all your Bitcoin needs.

[01:29:39] Sam Callahan: You can go to Twitter and follow me at @samcallah. And I just wanted to thank Alex. You know, I, I went down this rabbit hole. It is a dark rabbit hole, and I read a lot of the same books he did actually. And for somebody in your position, my man, it really, it makes me feel good that you know about this now and, you know, know about this stuff deeply now because in my mind, these two organizations possibly committed more human rights violations than any of them.

[01:30:07] Sam Callahan: So the fact that you’re on it, it how it makes me feel really good. And so thank you for writing this, man. It’s a beautiful piece and I just hope we can raise awareness about these organizations and potentially reform them and maybe abolish them completely.

[01:30:20] Alex Gladstein: So, yeah, and again, I mean, it was a painful process.

[01:30:23] Alex Gladstein: And look, I know some people are going to say, It’s not intentional, but can’t argue with the outcome. So then you’re arguing that it’s some sort of like, you know, unconscious outcome. It doesn’t matter to the people who got screwed, you know, in the end. And I think we just need to pay our respects to them and, and do what we can to learn about the system.

[01:30:40] Alex Gladstein: I will be producing kind of more content around this, like I, like I said, hopefully a book, other kinds of media content around this. I want to really kind of, hopefully bring to life an understanding of exactly how this kind of dynamic works. I think that would be a great thing to, to put out to the world.

[01:30:55] Alex Gladstein: I’ve done everything on the backs of incredible thinkers who did this before and saw this before, but they saw it earlier and they saw it in seven, they saw 50 years ago, they saw it 40 years ago. They saw 30 years. So, you know these people, whether it be Graham Hancock, who’s by the way now, like, you know, he’s diving into like ancient civilization.

[01:31:15] Alex Gladstein: He’s got the show on Netflix. I mean, he’s the one who really ripped open the bank and the fund in the late eighties with his book Lords on Poverty was, is such a must read. Cheryl Pay Who Debt Trap is just such a classic. I mean, these people, they saw this stuff back then they noticed it and then they just, it just, the world just like turned away.

[01:31:33] Alex Gladstein: Like we just forgot about the fact that these institutions are exploitative and you know, we need to get back and have this as a center of one of our, we need to have this as a central conversation just on ongoing. We need to understand that this is the biggest bubble of all. It’s so debt and so much of it is propped up in an illegitimate.

[01:31:52] Alex Gladstein: So you can follow me on, on Twitter at gladstein, and you can follow the work I’m doing there at the Human Rights Foundation. I would recommend that everybody follows Sam. I, I think he’s been really sharp on this stuff, so I’m really happy he could join us here. And again, thanks for giving us the time, Preston, to dive into this.

[01:32:07] Alex Gladstein: I know I came up to month ago and was like, hey, we gotta, we gotta jam on this when I when I finish. But I I I’m so happy to see that you agreed and that we’ve made this show, so hopefully people enjoy it.

[01:32:19] Preston Pysh: I learned a ton. That’s all I can say. Thank you both. What a pleasure, what an honor to uh, sit down and have this conversation and, and please share this folks that are listening and please share Alex’s his article because it’s amazing.

[01:32:33] Preston Pysh: If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for, we study billionaires. The Bitcoin specific shows come out every Wednesday, and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that.

[01:32:54] Preston Pysh: And it’s something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I’ll catch you again next week.

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