The Revolution Was Fiat, The Reaction Is Bitcoin

From the earliest days of human history, man has used money as a tool and symbol of power. In the civilized days of Monarchy, gold was the embodiment this power. Durable, divisible, portable, having some intrinsic value, and known to be scarce, gold was quite simply the best possible choice at the time. It was sound money:

Sound money has always been a check on the power of government to expand its influence.

Gold balanced the forces of the world. As such, no matter where you went, gold was transferable to the local currency. Whether you were in France or Florence, your gold was good. In fact, if you weren’t in your own backyard, using your own community’s debt instruments, gold was basically the only thing that was accepted. So whether you wanted to buy a copy of the Bible, fight a foreign war, or build a palace, you needed gold.

Then came The Revolution: replacing the Monarch, the Church, and generally anything goodi by instituting “reforms” and encouraging “progress” in the name of “the people.” At first, the sheer number of supporters of constitutional democracy was sufficient to establish this social experiment. Eventually, however, sheer numbers would prove insufficient. Why? Because this “new” systemii failed on every account to educate its supporters on the essential matters of politics and economics, leaving them intellectually high and dry and prone to the exact golden calves that the Church and Monarch were protecting them from. As a result, after experiencing a bit of lifestyle creep,iii an newfound and ever-growing sense of entitlement began to take root. And oh did those roots grow deep.iv

The roots grew so deep that the electorate began knocking on democracy’s door, demanding more and more. Where once they were thankful for their new liberties and freedoms, they soon found themselves adrift at sea, lost and without cause. To unyoke this infinite expansion of wants from the finite, gold-bound resources of the state, the Revolutionaries had no choice but to take hold of the money supply of their nations, wresting it from the grasp of sound money and all the goodness and balance it had fostered. This was the only way to keep up the ruse and placate the electorate. So they instituted Central Banking at a scale never before seen.v

“He who controls the money supply of a nation controls the nation.”vi

Alan Greenspan, former Chairman of the Federal Reserve of the United States from 1987-2006, even advocated for the gold standard as a young man. In his earlier days, before becoming subsumed by the inflationary Octopus, he was a thinker of notable repute and, in 1966, at age 40, Greenspan wrote a paper entitled “Gold and Economic Freedom”. From which we continue:

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

Exactly this. Statists of all persuasions – Conservatives, Liberals, Democrats, Republicans, it makes no difference what you call them – being confined to the braindamage that defines Revolutionary democracies, must categorically reject the gold standard. It’s too limiting for their “noble” needs. So they jam your dumb noodle with the insane narrative that their way is the only way and that your vote for the Candidate A is in any way different from a vote for Candidate B. And on it goes. Greenspan notes:

Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which-through a complex series of steps-the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets.

The ability of nation states to make unfunded promises is underpinned by the necessity of nation states to make unfunded promises. This is how the incentives align. So it’s little wonder that, in the century since the The Federal Reserve stripped gold of its power, the US has accumulated hundreds of trillions of dollars of unfunded liabilities. This sounds like a lot, but the size of these claims no longer has any bearing on the real world (the real world being finite and all), making any economic or political arguments on the basis of these liabilities, and therefore on the continuation of the US as a going concern, entirely untenable.vii The US is financially bankrupt because it’s morally bankrupt. Not the reverse.viii Basically, the US is broke because the Revolutionaries broke it. First, they broke the culture, then they broke the money, and now, hyperinflation, the ass-fucking tax to end all ass-fucking taxes, inevitable.ix As Greenspan points out:

The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

The amount of debt in the highly interdependent global economy is only useful in terms of “$maxint” notation. It really doesn’t matter what the actual figure is any more than it matters how many planets and how many universes there are. What matters is that the debt is unrepayable. What matters is that there isn’t enough productive potential on the planet to cover the long-nosed promises of the Revolutionaries. So what’s a Revolutionary to do? Confiscate. Just like Stalin. Just like Hitler. Just like Obama and Bush and Clinton. Greenspan closes:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

This is why the Revolutionaries will never in a million fucking years allow the gold standard to rise again. This is why the Revolutionaries will try to make Bitcoin illegal – only to fail utterly, publicly, and unforgivably – and only to end up on their knees sucking Bitcoin’s cock.x

This is why we, The Reaction, La Serenissima, have the Bitcoin Standard.

This is why we, not the Revolutionaries, have the power.

This is why.

___ ___ ___

  1. That is, sustainable, innovative, and a platform for art. You’ll notice that this is exactly the opposite of the braindead shit you “learned” in school. Oh, but somehow you think that democracy painted the Sistene Chapel, choreographed the mazurka, and built the Süleymaniye Mosque.
  2. “New” in the sense that mason jars are a “cool new thing.”
  3. Free “education” etc.
  4. This is the problem of giving a man a fish instead of beating him with a stick until he learns how to do it for himself.
  5. “Prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World Was I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

    But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline-argued economic interventionists-why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely-it was claimed-there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks (“paper reserves”) could serve as legal tender to pay depositors.

    When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve’s attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates. The “Fed” succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market-triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.

    With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain’s abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed “a mixed gold standard”; yet it is gold that took the blame.) But the opposition to the gold standard in any form-from a growing number of welfare-state advocates-was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.” – Alan Greenspan, Gold and Economic Freedom, 1966.

  6. James A. Garfield, 1831-1881, 20th President of the United States. He was assassinated after just 200 days in office.
  7. Any more than the USSR was a going concern in the 1980’s.
  8. Despite the reverse being regularly invoked by “journalists” to villainize bankers, jooz, etc.
  9. Inflation makes everything of quality more expensive and more expensive to the point where everything of quality is “optimal stocked” right out of the fucking market. So you start with good food from a local farmer and you end up with LMO poison from Monsanto’s factory in China. Not that you’d ever know it because “food” is food and you’re using CPI instead of art to measure inflation. Fucking Goodhart’s Law, y’know?

    Oh and don’t forget that just because your income is increasing to compensate, just because you’re young and on the up-and-up, without commensurate income tax bracket raises (which ain’t happenin’), you’ll be progressively fucked harder and harder in the shitter. Enjoy! Best democracy ever, right?

  10. This is why the Bitcoin-based Crypto Wars Redux will go exactly like the PGP-based Crypto Wars did. Tiz just maffs, after all.

26 thoughts on “The Revolution Was Fiat, The Reaction Is Bitcoin

  1. […] of the Phoundation crud from the Bitcoin code as a recent example. What catalysed this violent reaction? Historians may well find themselves divided by this. I’m inclined, without a shred of […]

  2. […] are seeing this because your blog was recently used as part of a DDOS attack against […]

  3. […] family. Certainly nothing irresolvable, and no interventions have yet been attempted, but being a Reactionary isn’t always smooth […]

  4. […] as is the case with hyperinflation). Of course, things are considerably simpler and saner in the Bitcoin economy where the currency inflates predictably. […]

  5. […] one and we’re still living with its unfortunate consequences. What do you say we try a little reaction action? […]

  6. […] from that pesky metal, US Dollars aren’t worth the paper they’re printed on. So ya, 15 cents is about right. […]

  7. […] Sound money and societal morality. Related: Zippy has an e-book out on usury. Related: Gold, Bitcoin, and reaction. […]

  8. […] this is completely contradictory and entirely ignorant of what the gold standard meant in praxis. To recap : Bitcoin looks nothing like the fiat system it intends to replace and that’s […]

  9. […] bitcoin en el sistema heredado se asemejan más a un intento de sabotaje o emasculación de la contrarrevolución Bitcoin destinada a poner fin al experimento fiat, o si, por el contrario, se trata de un claro […]

  10. […] more methodical and reasoned minds – the type, not coincidentally, generally favoured by sound money – to probe the depths of the asset’s underlying value. To paraphrase Asimov, it works […]

  11. […] clutches have been liberated of the burden of responsibility yet or not. Over time, sound money settles into the hands of those who are more frequently (and proportionately!) correct in their […]

  12. […] a subset of the population that may control as much as 75% of all bitcoins extant. And you thought fiat was unfair. Pah ! […]

  13. […] in case he (or you) didn’t know, is sound money, and as such, allows for a far more conscious legal system to develop, one in which gentlemen of […]

  14. […] from the most exquisitely qualified candidates ever conceived. Money doesn’t grow on trees. Not anymore. […]

  15. […] the link to the site in Land’s Quote note (#144), linking to Pete’s article ‘The Revolution Was Fiat, The Reaction Is Bitcoin‘ and which Land dubbed as […]

  16. […] let’s check out the new wheels. This time, on the heels of unprecedented disruption within the disruption, I’ve taken home another giant luxury […]

  17. […] have given this endeavour a better shot, to be sure, but they also had two generations of world reserve currency status with which to reinforce their mayogendered mass in the battle against the vicious vortex of […]

  18. […] of desperation, as so many have in times past and continue to this very day, Leonasch turned to foreign currency. While being illegal under the new communist regime, dollars were also the most flexible and […]

  19. […] (or three) as scarcity took hold. Makes you appreciate just how much better our little emerging cryptographic societ is, doesn’t it ? If not, the recent devaluation of your millions from thousands of BTC into […]

  20. […] seemed like the aristocratic approach to have a selected cadre of tech-savvy elite lead The Reaction against The Empire, but without real whips and chains, it ultimately proved unmanageable for even […]

  21. […] Secure And Why Block Size Ain’t Gonna Increase Any Time Soon 16. Adding Value To Bitcoin 17. The Revolution Was Fiat, The Reaction Is Bitcoin 18. Breaking A Bitcoin Brainwallet 19. The problem of digital identity, or how to circumvent […]

  22. […] owners of gold doubloons would foolishly make the same argument today, until such time as VR is omnipresent and able to digitally duplicate […]

  23. […] of the second major breakthrough of the Information Age (first was personal computing, second, Bitcoin) and that means that some people are getting insanely rich and the rest are treading water […]

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