S17 E40: Amir Taaki & Prof. Richard Werner on Decentralization, Community Banks & the Coming CBDC Panopticon

(Recorded live at Mallorca Blockchain Days in front of an audience, this episode is a crossover between the conference’s final panel and the Bitcoin Takeover podcast. Sponsored by Cake Wallet, LayerTwo Labs, Orange Rock, Braiins Hashpower, and SideShift. Cake Wallet put up a $100 prize in Bitcoin, Monero, or Zcash for the best audience question, decided by the panelists’ vote. Also, don’t miss next year’s Mallorca Blockchain Days!)

This pairing definitely looks strange on paper, but becomes obvious in hindsight. A British-Iranian cypherpunk who fought in Rojava and created the BIP system sharing a stage with a German economist who coined the term “quantitative easing” and predicted the 2008 financial crisis. Yet Amir Taaki and Professor Richard Werner turned out to be almost eerie in their alignment. Both men believe the same thing from opposite directions: power over money must be pushed down to the smallest possible unit, or it will be consolidated into something monstrous.

This was not a debate. It was a convergence.

Fake Economics and the David Ricardo Problem

Werner opened with his now-familiar indictment of mainstream economics, the deductive, axiomatic approach he calls charlatanism dressed in mathematics. You start with axioms you never verify, add assumptions you admit are false, build a fictional model, and arrive at conclusions that were convenient to the people who funded the exercise. Joan Robinson warned the public to study economics not for answers but to avoid being deceived. Werner has made this the spine of his career, and longtime listeners will remember him laying out the full architecture on S15 E56: Bitcoin, CBDCs & Banking and his return on S16 E34.

The historical twist here is David Ricardo. After his death, a tract surfaced in which the patron saint of free trade argued for abolishing all banks except the Bank of England. Werner notes the uncomfortable symmetry: Marx’s Communist Manifesto demands the same thing. The key capitalist and the key communist, converging on one central bank. When Werner talks about the Cantillon effect in this context, he is describing scenery every Bitcoiner already knows by heart.

The alternative is what he calls scientific economics: the inductive, empirical method of the German Historical School, studied and absorbed by Japan, then carried through Korea, Taiwan, Singapore under Lee Kuan Yew, and ultimately China under Deng Xiaoping. Look at the facts, do what works.

Lessons from the Prussian Army

The conceptual centerpiece of the panel is subsidiarity, the decentralization principle the Prussian king enshrined around 1812, born from battlefield necessity. A small state surrounded by enemies cannot afford officers waiting for orders from headquarters while the terrain shifts under their feet. Give the officer on the ground the goal, the training, and the freedom, and he will outmaneuver any central planner. Werner cites comparative studies from both World Wars showing German units consistently more effective per capita than their British, Soviet, or American opponents. Comm‌unism failed for exactly the inverse reason.

Then he pulls the thread into money. The officers on the ground in economics are local banks making local lending decisions. Germany in the 1920s had 25,000 of them: village banks, savings banks, credit unions. The Cantillon effect applied at that scale means newly created purchasing power reaches the small firm in the same town, the same week. One central bank means the elites closest to the spigot drink first and everyone else gets the diluted runoff. Bitcoiners call this the Cantillon effect. Werner just mapped it onto institutional banking history.

Omar Khayyam Meets the Rezidenzschloss: Two Men, One Diagnosis

Amir’s questions throughout the panel come from a man who has spent years building exit ramps from exactly the system Werner describes. His own trajectory is well documented on this show: from S12 E2 on the early days of Bitcoin, where he recounted creating the first BIP and libbitcoin, to the legendary seven-hour S15 E71 on Bitcoin & DarkFi, and more recently the S17 E20 privacy roundtable with Harry Halpin and Christopher Cialone. The throughline is a man who abandons any power structure he starts to suspect of capture.

Werner’s diagnosis of Europe lands in that register. Germany, he argues, is not sovereign: the 1945 occupation statutes are effectively still operative, the constitution remains suspended in favor of a basic law designed for occupied territory, and the EU itself was architected by CIA-recruited founding fathers (Monnet, Schuman, Spaak), a claim he notes was declassified in 1997. The European Parliament cannot initiate legislation, making it a rubber stamp in the Soviet style, with generous tax-free salaries functioning as the bribe that keeps members quiet. This is strong material, and I flag it as Werner’s framework rather than established consensus, but he argues it calmly and with documentation, which is why audiences keep asking him back.

His constructive thread is Article 146 of that same basic law, which dissolves the basic law itself whenever Germans convene a constitutional assembly and give themselves a real constitution. Pair that with his observation that the technological justification for representative democracy (the horse and cart problem) died a century ago, and you arrive at his proposition: direct democracy, digitally mediated. He even namechecks DarkFi as the sort of infrastructure that could carry it, provided the voting system cannot be manipulated. When the man who wrote Princes of the Yen starts talking about cypherpunk voting rails, the crossover is complete.

The Scarcity Lie and the Wörgl Miracle

The most rhetorically potent stretch of the panel is Werner’s assault on scarcity economics. Fifteen percent annual growth is available to every country on earth, he insists, demonstrated repeatedly by the high-growth Asian economies. Degrowth and austerity are not laws of thermodynamics; they are policy choices dressed up as physics. Free healthcare, real pensions, prosperity: all affordable. The 2020 spending spree proved the money appears whenever the elites want it to appear.

Amir then steers him to local currencies, and the room gets the Wörgl story in full: the Tyrolean mayor in 1932 who employed the town’s jobless, paid them in receipts, told his grocer wife to accept them, and reached full employment while Germany and Austria starved around him. Irving Fisher sent a PhD student from Yale to document it. The neighboring towns began copying it. Then the Austrian central bank threatened the mayor with prosecution for currency forgery and Wörgl slid back into the Great Depression. It is the Cantillon story in miniature, and the suppression of it is the tell.

The tally stick aside is a delight: Norman England’s split hazelwood sticks, with the grain of the wood functioning as a forgery-proof fingerprint, the foil kept in the treasury and the stock circulating (from which “stocks and shares” descends). Public key and private key, in wood, a thousand years before Diffie and Hellman.

Sea Power, Land Power, and Why Iran Matters

The geopolitical segment is vintage Werner. The Bank of England was founded in 1694 after the Dutch invasion of 1688 put a foreign aristocrat on the throne, the last successful invasion of Britain, scrubbed from English textbooks because the descendants of that elite still hold power. The Stuarts fell because they refused the central bank; Charles I lost his head over it.

From that moment, Britain’s financial clique needed Germany and Russia permanently divided, and later China and Japan. Mackinder’s warning about Central Asia explains the First World War’s hidden trigger (the Berlin-Baghdad-Basra railway threatening British sea supremacy) and, in Werner’s reading, today’s bombing of Iranian Belt and Road bridges. The ultimate target of the wars against Iran and Russia, he says, is China.

Bitcoin Gets Judged

The closing exchange is where listeners should pay attention. Werner’s verdict on Bitcoin has been stable across his three appearances: a useful asset, a genuine safe haven in inflation-ravaged countries, but lacking transactional adoption. He wants more of it used as money.

Amir’s verdict is savage and worth quoting at length because it continues the argument he ignited publicly in December 2024, when he called Core’s record a failure, said the people in charge should be fired, and demanded client competition. On this stage he gives the theory underneath the tweets.

Bitcoin has no stakeholder empowered to lead, so its technical ambitions shrink to nothing, and what fills the vacuum is Saylor-style propaganda: simple narratives, number go up, a “proletariat vibe” in his phrase. The ideological capture leaves the entire crypto market chained to American monetary policy, everyone waiting for Trump to turn the tap back on. A safe haven asset should not need the Fed. That dependency, Amir argues, is the unproven thesis.

Coming from the man who wrote the first BIP, this is not a shitcoiner sniping from the sidelines. It is an architect auditing his own building. You do not have to agree to recognize it as one of the more honest critiques Bitcoin faces in 2026, and it pairs uncomfortably well with what John Carvalho told me on S17 E11 about the Bitcoin Depression.

Two Answers, One Riddle

The audience questions produced the prize moment: one listener asking how politicians can produce growth at all (Werner: deregulate community bank creation, low capital requirements, registration instead of licensing, watch the small-firm boom repeat the free banking eras of America, Scotland and Germany), and another asking why the Soviet Union collapsed in days rather than decades. Werner’s answer there is speculative but chilling, involving sleeper agents activated from inside, with 1918 Germany and recent Syria as the same pattern. Amir voted it the best question and Cake Wallet paid out.

The symmetry worth sitting with is this: Werner says the EU is building a digital panopticon, chat control legalized, CBDCs designed to kill community banks and leave one Soviet-style central bank standing. Amir says Zcash’s FHE and indistinguishability obfuscation breakthroughs, plus AI-driven formal verification, are closing the auditability gap that has always hobbled anonymous money. One side is building the cage. The other is sanding down the key. Watch both.

Listen to Prof. Richard Werner & Amir Taaki on YouTube, Spotify, Apple Podcasts & More!

Time stamps:

0:00 – Intro: A Crossover Panel at Mallorca Blockchain Days
2:02 – Werner’s Paradigm: Why Mainstream Economics Is Charlatanism
5:52 – David Ricardo, Karl Marx & the Single Central Bank Dream
7:02 – Scientific Economics: The German Historical School & East Asia
9:25 – The Subsidiarity Principle: Lessons from the Prussian Army
12:46 – Decentralization in Money: 25,000 Local Banks
15:10 – Europe in Decline: Germany’s Negative Growth & Rising Controls
17:20 – Germany Is Not Sovereign: The Occupation Statutes Theory
20:45 – The Undemocratic EU: A Soviet-Style Rubber Stamp Parliament
21:58 – Article 146: Germany’s Path to a Real Constitution
24:39 – Direct Democracy via Technology: Why Do We Need Representatives?
26:00 – Amir Asks: What Does the Ideal Society Look Like?
27:13 – Switzerland’s Referendum Culture as the Model
29:30 – The Scarcity Lie: Every Country Can Have 15% Growth
32:15 – Disaggregated Credit: Productive vs. Non-Productive
33:24 – Why One Currency? Medieval Bonds & Local Money
35:36 – The Wörgl Experiment: Full Employment in the Great Depression
38:04 – Tally Sticks: The Original Public/Private Key Money
40:10 – Local Credit as a Social Force Under Community Control
43:09 – Sea Power vs Land Power: The Bank of England’s Origins
47:07 – 1688: The Foreign Invasion Nobody Talks About
49:49 – Belt & Road, Iran, and the Real Target: China
51:47 – Sponsors: Cake Wallet, LayerTwo Labs, Orange Rock, Braiins, SideShift
54:22 – The Year in Privacy: FHE, Obfuscation & the Zcash Hack
56:35 – The Year in Economics: Chat Control & the Digital Prison
57:46 – CBDC Explained: The Umpire Who Wants to Play
59:04 – How a Banking Crisis Ushers in the Soviet System
1:01:07 – Q&A: How Can Politicians Create Growth?
1:06:31 – Q&A: Why Did the Soviet Union Collapse So Suddenly?
1:12:05 – The $100 Cake Wallet Prize Vote
1:13:07 – Closing Question: What Do You Think of Bitcoin Today?
1:14:07 – Amir on Bitcoin: No Leadership, Proletariat Vibes & Trump Dependency
1:17:05 – Werner: Bitcoin Works as an Asset, Fails as Money
1:18:18 – Bitcoin, Geopolitics & Iran Charging Shipping Fees in BTC
1:20:32 – Gold, Cash & the War on Alternatives
1:22:51 – Closing