Money

Have you ever thought of what money is? I have been searching for answer to this question and going through this rabbit hole to find about Money for some time. Its very hard to conclude what exactly it is. But one certainty is almost everybody seems to go after it. Some do it for living, some for power, some for buying stuff, some to help other people, some for status, some to impress others, and many more. Most sacrifice their finite time for money, some even prioritize it over relationships. But its really hard to know what Money actually is. Very few use it as a tool of freedom which is what I found very interesting among its various use cases. Our civilization has come a long way and there was always this tool we call money and every era had few people who used it as a tool and most of the rest lived to get it for above mentioned various purposes.

Normally, we go through history to learn about money. But lets do some thought experiment here, and see what money is from the year, century ahead in the future then through the present time and to the past. No one knows the future but there’s some hope and truth to it about the money that we supposedly will be using and is interesting.

Future

The year is 2106 and almost all of us alive today are all dead and gone. But our grand children and great grand children are living and thriving their prosperous life. How? There is a sound, fair and equal monetary unit for every human living on earth and may be on other neighboring planets like Mars too. No currency of the particular country/planet is powerful than the other. No president of any country has the power to suppress any other country just because it has superior military. No central bank of any country has the authority to decide the amount of currency to be printed/created and dilute the existing amount. Countries are not fighting the physical and nuclear war for the resources or control over one another. Because there is no point and advantage whatsoever in those conflict. But the only war left will be the cyber-energy war where there is no any physical contact and the winner will gain enormous energy and it is stored in such a way that it can be used for and by the humans for centuries and millennia to come.

The single unit of that currency will take more than 34 years to mine or create from 2106 till 2140. There have never been such a currency in human civilization where the rules are already set for its issuance for decades to come. The rule was created and engraved in its protocol so that no one can change it. This rule was written at the end of the first decade of 21st century, 2009 to be exact. No single emperor, monarch, king, dictator, president, organization, military, corporation, ruler or country has the power to change its rule as oppose to constant change and blatant abuse of currency throughout the history. The only thing anyone can do is to participate in creating it and use it exactly as per its rule. These rules can be changed if and only if every single participants agree on a consensus.

Why is this rule important? Rule should be same for everyone and no-one should be in exception including the men in power. Lets think of it as any sports. What if the game is created in such a way that its rule is changed according to the attributes or capabilities of each player? It won’t be sports in the first place and there would be no competition and no audience at all. No rational player will ever participate in such a crooked sports. For example, if you cant dribble a ball, or dunk or shoot or jump high enough, run for 40 minutes competitively, playing basketball is not for you, simple as that. Its better to choose other sports and endeavor for life or work hard so that you can play basketball under the common rule which should not be changed for anyone in any circumstance. Or else its Not a game of sports. In case of money, there is a Cantillon effect. Those close to the institution which creates money, gets benefited the most and those furthest will have to pay for it in the form of inflation which is nothing but a hidden taxation. It literally is a con game.

You might have already guessed the money I’m writing about. Yes, its Bitcoin. Before getting into its detail, lets first think about the monetary system today. The rule of monetary system is constantly being changed by the few men behind the closed doors. Nobody knows what the rule will be next day and how much of new money are they going to print this year or next year, let alone for a decade. But for Bitcoin, the rule is set in stone forever. 2140 is the year it is expected to get last satoshi of bitcoin mined. And from 2106 to 2140 miners all over the world will spend tremendous amount of energy to mine that last unit of bitcoin. This war for last unit of currency will go down as the most long fought, non-physical, non-nuclear, peaceful war in history of our civilization. Will be writing about this on detail in future blogs. Check out The Bitcoin Standard, if you want to know more about this new monetary system.

Present

Exploring about money in depth led me to question the morality of the current system. The money creation today is allowed to certain institution or government where the people in power can change and decide its amount without consensus or any rule. The rule is being changed constantly as if they are helping economy to thrive. Do you think the increase in supply of money helps you raise your quality of life? What are the consequences of increasing its supply? What is the meaning of tax collection if its supply can easily be increased by the decision of certain group of people? Why not increase to unlimited amount so that everyone has abundant of it? What is the meaning of taxation in that case? These are the questions which led me to go even deeper and explore more about Money.

Recently, inflation has been the topic of concern throughout the world. What do you think is the main cause of inflation? What did the people in power do recently before the inflation start rising? Its the increase in money supply that results in the dilution and devaluation of existing amount of money. If the amount of money is abundant, then the price of everything rises as the value of money dilutes. Central banks around the world printed unlimited amount of money recent years, some even distributed certain amount to its citizen. Locked down the economy and provided people with free money, which many thought could solve the problem. People bought stuffs that they don’t even need with that money. Why wouldn’t they? After all its free money. Nobody worked for it. People enjoyed staying home thinking the foods, goods and services are going to be produced out of thin air without working men.

Bastiat said 200 years ago: If goods and services don’t cross borders, soldiers will.

We all know the result of such policy. The rising prices, inflation, taxes and wars are no surprise. Who will pay for those free money that they distributed? No aliens are coming to pay for them. The future generations are indebted long before they are born.

The corruption in money will corrupt humanity. The integrity of the money is directly proportional to the integrity of the civilization. We need sound money to be able to create sound world.

Taxes are rising and will continue to do so. The most powerful governments in the world can’t even solve their problem of homelessness, yet they are boasting that they can change earth’s temperature, if you pay more taxes. Pretty funny and laughable. You can check more about history of taxes in Daylight Robbery and if you want to know about economics, you can check out The Principles of Economics.

The inflation rate of 2022, Zimbabwe was 284%, Venezuela was 210%, Turkey was 73% and Argentina was 72%. More than 50 countries around the world has double digit inflation rate. People are losing their life savings, there are people with low income and cant even afford food for their family. Things are getting ridiculously expensive. Money they saved for the future are losing its purchasing power faster than we can imagine. Their money are getting worthless every day. These are the consequences of bad monetary policy. Every currency is dependent on the US Dollar because its the reserve currency of the world. Federal Reserve is the central banking system of the United States. As the name states, its the central bank, meaning the central control of the monetary system. This actually is the 4th central bank of America. There is a reason why its three precursors failed. Every centrally controlled currency ever existed in human history, has failed and if history is any guide, US Dollar won’t be any exception.

Gold has been trusted for thousands of years as a sound money but Bitcoin has been rising as having more sound properties than gold. Of course, nothing can beat gold in its history of trust for thousands of years but Bitcoin is better than gold in its properties of portability, storage and fixed supply. Policy makers and leaders of countries like Nepal and many others try to ban Bitcoin. How do you ban someone remembering 12~24 words? They don’t even understand it and brag about banning. It is called F you money for a reason. Bitcoin gives total self-sovereignty to the individual holding it. Countries, companies and people will have no option but to accept it, sooner or later.

If you want to know more on that, you can read Bitcoin: Hard Money you cant F With

Its said that History does not repeat itself but it often rhymes. So lets go briefly through the history of Money.

Past

If we go some 5000 years back and read about the ancient Egypt, Egyptian Kings made Pyramids as a tomb for the burial of their dead body. With them, they wanted to carry all the riches/gold they had including the gold jewelry to the heaven only to be found by grave robbers even after 1000s of years. Humans have always tried to protect and keep their wealth for as long as they possibly can. They even tried to take it with them after their death to heaven or afterlife, whatever they believed then. Gold was the sound money for thousands of years but one thing gold couldn’t do is its holders couldn’t take it with them after their death. Bitcoin on the other hand, one can literally take it with him even after death. If he don’t share his private address to anyone, at least he can make the other existing bitcoin more valuable by removing the amount he held from its existence. Because its supply is fixed to 21 million, the more number of bitcoin becomes inaccessible, more valuable the remaining unit will become. This is the most noble charity one can do to humanity and fellow humans.

Lets go 1600 years back to the great Roman Empire. It lasted for more than 1000 years but eventually fell apart and collapsed. Among many reasons of its collapse like attack from outside forces such as Barbarian tribes, it was also crumbling from within. The constant wars, taxation, inflation and severe financial crisis played the fatal role. The economic trouble, over expansion and over spending of military, government corruption and over reliance on slave labor was contributing heavily towards its collapse. The gap between the rich and poor had widened and wealthy classes fled to the countryside to avoid taxman. The empire was eventually rocked by the labor deficit. When agricultural and commercial production declined, the Empire began its grip altogether. They funneled all their money to the military expansion which led to the slowing down of the technological advancement and its civil infrastructure fell into disrepair.

Lets look at the recent history from 500 years back to the start of 1500s. There have been 3 powerful empires during these 5 centuries. Dutch Empire was the strongest for about 200 years till the end of 18th century. Dutch Guilder was the strongest and powerful currency then but eventually they printed unlimited amount of its money and spend it on its military and war which led it to its decline. Same was the path for the next strongest empire, the British Empire. They did the same, collected the most amount of Gold available but again eventually confiscated it and allocated most of its debted money, Pound to its military and war. And the result was nothing different than that of Dutch Empire. British Empire collapsed and the new economic behemoth arose through it, the American Empire from the end of 19th Century to the start of 20th Century. America did the same as every empire did in its starting. It started debasing its currency from Gold standard, has been printing lots of money and the value of the dollar is decreasing at the speed that no empire in history has seen. If you want to know more about the central bank of America and dollar, I highly recommend the book. The Creature from Jekyll Island. You will learn about the reason why 3 of its precursors failed.

Thanks for reading. See you on next one.