I just bought a thermomaster chip for my 1981 z28 what will happen if i keep the 195 thermostat in it?

 

I'm not an expert here, but my guess will be that you'll get all the usual benefits, and that your radiator fan (if it's electronic) will run more often than necessary.

 

The listing on the Hyertech page indicates is turns the (electric) fans on at 160*F. It also indicates that it is intended to work with a 160* or 180* t'stat.

As Jake points out, your fans will be running all the time, basically fighting the 195* t'stat.

A thermostat only STARTS to open at the rated temperature (195*). It isn't fully open until the coolant reaches about ~20* higher, in your case ~215*F. That's the temp GM wanted it to run at, to minimize emissions and maximize fuel mileage. They weren't really thinking about a few extra HP, running cooler. Your fans will come on at 160*F and there won't be any coolant flowing through the radiator. Engine will reach 195*F, and the t'stat will start to open. Coolant will cool rapidly in the radiator, and the t'stat will start cycling.

In effect, you have not lowered the engine operating temperature very much, and if the chip also advances ignition timing, you may get detonation (knock), or need to upgrade the octane of your fuel.

Not a good idea.