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fellowtraveler
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December 28, 2010, 08:21:48 AM |
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I think it is a mistake to compare Bitcoin to Federal Reserve Notes. (The old argument that states: "Dollars only have value because we all ACT like they have value, so you can do the same with Bitcoin!")
This is actually a flawed position, since dollars have failed as a store of value and are viewed by most people as a fraud from the start.
But more than that, let's keep in mind that the only reason dollars are being used in the first place is due to the use of force. As soon as that force stops warping the market, the dollar instantly disappears. (You'd have to eliminate legal tender laws.)
Therefore, comparing Bitcoins to dollars is tantamount to claiming that Bitcoins will also never work without force and/or fraud.
I'll explain in more detail...
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Imagine that everyone in the world used gold, and that you were the one person on earth who had the power to control that gold.
For example, maybe you could magically disappear it from peoples pockets and move it into your own, and then spend it yourself, leaving them without the gold that they previously had.
You could snap your fingers and create more of it; perhaps double the supply. (That would be good for youbut bad for everyone who stored their savings in gold!)
Or maybe you would have the sole monopoly over the supply, and everyone who wanted some would have to get it from you, first. You could even loan it out at interest, even though, in that situation, there would be more gold owed to you than was even circulating on the earth!
...That is the power of the Federal Reserve.
On the news recently I saw a headline that said, 420 Banks Demand One-World Currency.
I realized that when they say the word Currency, what they actually mean is, "hundreds of millions of people's savings manipulated by a few powerful men."
Think about it. The gold example, above? Thats what a fiat currency is: a moral wrong. Its a terrible powernot even possible under an actual gold-based systemthat gives a few bankers the power to bankrupt entire nations, under the guise of policy.
Who could ever advocate centralizing that kind of power, once they realize what it really means? Imagine if there was a news article that said, "420 Business Leaders Demand One-World Dictatorship"it would just look ridiculous. But "420 banks demand one-world currency" doesnt sound so harsh, does it? The average, public school-educated Joe might think the bankers know what they're doing better than he does. Thats why the media cultivates the image of "the financial wizards" over at the Fed, so that people see them as experts, managing a system that most people find "boring" and can make no sense of. Monetary policy is viewed through the lens of the media as a realm of experts instead of its proper station: the realm of lies.
Normally, a person will not value a piece of paper in the same way that people value gold. If you offered me an average piece of paper or a piece of gold, I would choose the gold every time.
So, what if you wanted a large group of people to suddenly choose to use your paper instead of using gold? Given that such a thing would normally never happen on its own from natural market forces, what are some of the things you would have to do for that to happen? (Keeping in mind the vast power at your disposal, if you are successful...)
You could start out by holding their gold for them, and using the paper as claim tickets. That way, the claim tickets will come to be valued psychologically by the people who use them on a day-to-day basis. This is how the banks started out.
You could pass a law requiring all taxes to be paid in your paper claim tickets.
You could pervert justice by using the Force of the State. For example, by forcing people to accept paper as real money when they sue over the issue in court. By ruling that all payments in dollars are legal and binding, and that no other remedy is available in the court of law, people would be forced to resort to extra-legal remediesor to give up their claim to their gold.
You could act incrementally, over decades. You could create situations where events you wish to transpire would be forced to a head at some future time. For example, promise to redeem all the paper tickets in gold, but then start printing paper tickets. (Forcing a future devaluation that the people might not otherwise have allowed to happen.) This was the actual cause of Nixon closing the gold window in 1971, which was in itself merely the consequence of something that happened 4 decades prior. The same could be true of the devaluation of gold from $20 to $35 that occurred during the reign of FDR.
You could act suddenly in times of great national emergency, and simply confiscate all of the gold. Many people are shocked to hear that this happened in the United States, but it did. Everyone used to have it, didnt they? Now its locked in a giant vault and guarded by guns, isnt it? How on earth did that happen? It was forcibly confiscated during a time of great national emergency. (As the people now holding it hypocritically and continually try to convince us of its inherent worthlessness.)
You could make people feel stupid if they like gold, and use punitive tax consequences against those who invest in it, and create a national attitude against it.
The lie we tell ourselves is that the very existence of such an evil power (monetary policy) can be managed. That giving such a terrible power to any entity is acceptable or moral, just because we think the experts with the control will mostly manipulate it in our favor (and who even believes that anymore?)
It can be seductive, though, if you get a bunch of inflation and boom time for the first decade or two, before the cycle swings the other way into Depression. The bull markets of yesteryear were not real wealth, but merely misallocation and distortion, to the benefit of corrupt elites, to be paid for later in poverty and tears by the masses of innocent people who worked their whole lives for their savings, only to wake up penniless on the continent their fathers conquered. (Jefferson.) That doesnt mean that nothing good happened in our economy during times of boom (or that everything during the coming Depression will be bad.) But it does mean that the economy was warped and perverted, by powerful men, to the benefit of some and to the detriment of those who had actually worked for it.
BTW I'm a big fan of Bitcoin, and I think it has an important place in everything that is now happening. My only point here is that I think it's a strategic mistake to promote Bitcoin by comparing it to Federal Reserve Notes.
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