In a time where some people are wetting their pants over ‘fintech’ and how exciting crypto is, I’m here to tell you that ‘money’ has been getting progressively worse for a long time, and for the average chump it will only become moreso.
First things first, why have I got inverted quotes around ‘money’? Well that’s because we don’t even have money anymore. Technically speakling, money is gold, silver and some other precious metals. The plastic paper we pass around is currency. Even worse, we have fiat currency.
Let’s take brief a trip down memory lane to look at some historical ways to store value, see where we were at, and where we are now.
Stuff
Your distant ancestors could pass stuff between each other. If you wanted other peoples’ stuff then you better hope your stuff is useful, or else they probably won’t want to trade with you.
So what is actually useful then? Tools, clothing, animals, food, whatever keeps you alive.
The nice thing about having stuff is that in some sense you are immune to the trends and fashion of the ‘markets’.. if there happens to be some tulip craze and suddenly everyone thinks a certain tulip is worth the same as a house – and then suddenly they don’t – it doesn’t really affect you.
If you have a useful physical thing, when you’re not exchanging it for other things you can just use it yourself.. you know, to survive.
Fungible food
Food which didn’t expire quickly and was fungible was considered a useful medium of exchange.
Products like rice and grain are ‘fungible’ in that each unit is effectively equivalent, and so can be conveniently estimated, weighed or measured, and exchanged.
These substances are a clear example of a ‘store of energy’ – someone spent energy in order to extract and prepare this product from the earth, which then saves other people having to do it themselves. From there we have a somewhat universal reference point with which we can exchanging the expenditure of energy. Someone spends their energy raising a chicken, someone else expends their energy sewing a jacket – all of them need to eat and so now they can exchange these items in the context of a common reference – weights of grain.
Mainstream textbooks tell us a nonsense ‘ancient’ story that bartering different objects was unfeasible and so ‘money’ was invented as a practical medium of exchange. This is a lie – for much longer than we have had ‘money’ in this world, we have had debt. This just means simple records of who owed who, referenced in terms of a fungible item. This would mean rice, grain, corn, whatever – depending on which part of the world we’re talking about.
But I digress – the good thing about fungible food as medium of exchange is that in a pinch – you can eat it.
Precious metals
When it comes to gold, silver and so forth, we now have a substance that – at least for most people – has no inherent function besides being a medium of exchange. Sure it has industrial applications and for jewelry, but it won’t keep you warm in the winter or fill your stomach.
On the positive side, these metals – gold especially – are compact and convenient to transport and exchange. They can be melted down and coined into predictable denominations.
Metals will also not degrade and perish like the foodstuffs above. Grain, for example, even in optimal conditions will not survive for more than 10-12 years.
One key feature of precious metals is that there is a limited supply of these substances in circulation, and it takes significant effort to find and extract more of it from the earth. This means gold or silver – barring large scale market manipulation – should retain a somewhat consistent perceived value.
Metal Certificates
The paper currency we pass around today has gone through many iterations but has its origin in pieces of paper that were used effectively as claim checks (like when you leave your jacket at the dry cleaners) for physical pieces of gold and silver.
Note: I won’t derail this article for now with talk of promissory notes and bills of exchange, but you may research the history of those or wait for a future article on the subject.
Notice the type: “One silver dollar, payable to the bearer on demand”. For reference: a silver dollar was a standard weight of one troy ounce of 0.999 purity fine silver.
In other words, instead of carrying around gold and silver coins, you could carry and exchange pieces of paper which were redeemable for said coins. At any point you knew that you (or whoever you passed the certificates to) could go and collect the physical metal from the appropriate bank or goldsmith. The holder or ‘bearer’ of the certificate had that weight of metal ‘payable’ to them, when they showed up to the bank to ‘demand’ it.
Now assuming that the people physically holding all the metals weren’t printing and distributing more certificates than the quantity of metal which existed in their vaults, everything is fine… right?
Legal tender / fiat currency
Aaaand now we’re in trouble.
‘Fiat’ is latin for ‘So be it’ or ‘Let it be done’. In other words, this ‘legal tender’ has value because the authority ‘says so’.
It was a number of steps in the making, but it was August 1971 when Nixon severed the direct convertibility of U.S. dollars into gold. That meant that there was no longer anywhere you could go to get the actual gold. You’re just stuck with these pieces of paper.
This same transition was done all over the world, at different times.
Why is the UK currency called the ‘pound’? A pound of what? You may recall hearing the term ‘pound sterling’. That’s exactly what it was. Sterling silver, measured in the imperial weight of ‘pounds’.
Of course, just like the silver dollar, this is no longer the case.
Now the obvious problem here, is that with no direct obligation for the note-printers to have corresponding weights of metal on hand, they can basically print as many of these pieces of paper as they feel like. As you can imagine, this is a recipe for inflation.
For reference, as of 25th July 2023, if you want to buy 5 pounds of physical silver it will cost you £1,387.64.
To state the obvious here: the price of silver metal has not gone up, the value of those pieces of paper and the silver currency has gone way down. This is why in old books and stories the characters are talking about shillings and farthings, and people are buying mansions for £50.
Now (aside from shady practices from the silver certificate institutions) fiat currency is the first time in this list that it has been possible for value to be stolen from you without anyone ever putting their hand in your pocket (or even breaking the law!). Simply by printing more of the pieces of paper, the value of the paper you already worked for, goes down.
I should note that civilisations do have a historical tendency to debase metal coins (ie mixing precious metals with less precious ones), which has a similar inflationary effect, but is not quite the same. If you hold a real gold coin then you still have that coin, even if your neighbour was handed a mixed one at the market. Anyway, not to digress..
Digital money
Many people will point out that ‘digital’ money is not new, which is quite true. The vast majority of the ‘money supply’ does not exist in physical form, but rather as ones and zeros or digital records on a computer somewhere – securitised mortgages, term deposits, whatever.
Consider how easily one can inflate the ‘money’ supply when they don’t even have to physically print most of it!
So aside from the theft of inflation, digital money comes with a new problem. This problem is essentially the flip-side of why the establishment loves it – you can now be cut off from your funds at basically any time without warning.
If you’ve ever had the rude shock of being on holiday and having your credit card frozen thanks to your bank assuming that ‘fraud’ has taken place, you have a taste of this experience. If the cash machine doesn’t want to spit out notes – either to you specifically or to anyone – you’re out of luck.
Likewise if you’re relying on a credit card, that can be turned off at will from anywhere in the world with the push of a button (or cycle of an algorithm).
If you consider this from a state-control point of view, this is a much preferred system than having everyone walking around holding cash. If someone says or does anything that the establishment doesn’t like, they just push a button and disconnect that troublemaker from their finances. Just like turning off a tap – except remotely. The state and/or bank can make up whatever excuse they feel like later.
Compare that to having someone with a mattress stuffed with cash. Now it becomes a lot harder to discipline that person for being a bad boy (or a truth-telling boy). Imagine trying to punish a dog who has his own shed full of snacks on hand – it doesn’t really work.
Now you may see why there is a continuous push to get rid of cash – it is the only practical way we have (for now) to still interact with the system conveniently without the potential of easily being ‘cut off’.
Crypto-currency
Now let’s consider these amazing magical things that everyone has been getting so excited about – crypto-currencies.
The mainstream media would have us believe that some rogue genius(es) going by the name Satoshi Nakamoto devised this amazing new technology to help ‘free the people’ from the slavery of the international bankers, and is such a hero that he never collected on his original million bitcoins (now worth 30~ billion USD).
Why were these crypto coins so popular? Was it because everyone wanted to use them to buy day to day items? Not really. Was it because it is so amazingly secure and anonymous? Well if the blockchain is touted as an immutable record, then that doesn’t sound like a great platform for privacy, does it?
No, the reason why these ‘coins’ became so popular, is because nerds, business sharks and youtube profiteers were using these coins as a speculatory pump-and-dump scheme on steroids.
A common thread also was that various foxes found themselves in the position of guarding the henhouse and couldn’t resist tapping into peoples accounts. Oops. So much for ‘secure’.
What to do? Well, after a good decade of cryptocurrency given lip-service across all the banker-owned mainstream media (weird how they allow a direct competitor to dominate their channels) the establishment appears to have come to a consensus.
Crypto currencies are apparently such ‘amazing’ technology, that now governments across the world are devising their own. As of June 2023, 130 countries are ‘experimenting’ with Central Banking Digital Currencies. All the amazing freedom and privacy of cryptocurrency.. except with none of that.
So why would governments be interested in this stuff?
One ‘amazing’ aspect of this new technology is the ability to use ‘smart contracts’. That means a digital coin is not just a fungible credit like any other, but it behaves differently depending on whatever code is programmed around it.
What does that mean? One way to think about this is to imagine a shopping voucher as contrasted with a dollar bill. There can be terms and conditions attached to that voucher. Maybe you can only use it at the restaurant outside peak shopping hours. Maybe it only applies to products of a certain brand, or expires on a certain date. Maybe it’s only valid if you show some kind of ID or membership status.
Compare that with a 50 dollar bill. That bill does not discriminate. You can use it to buy a whatever food you feel like at any time of the day (price pending). You can buy fuel, a kangaroo steak, give it to a homeless guy, ultimately it’s up to you.
So how do smart contracts come in? Well imagine that you now have a bank account full of store vouchers, whereby the terms and conditions can be changed at any time.
Buy too much steak one week? The algorithm might just block you from meat purchases for the rest of the month – since you’re contributing too much to cow-farting and ‘climate change’. Say something slightly negative against Big Brother or an ‘irresponsible’ comment regarding government health policy? Automatic fine deducted and a mark on your credit rating. Good luck getting that mortgage now.
Can you see how convenient a system of rule this is? With this sort of granular and immediate control over peoples’ finances, the establishment probably barely need a police force. People police themselves to make sure they’re still able to buy their next meal.
Sound too crazy to be true? China already has these systems in place. AI can automatically ID you jaywalking by scanning your face on a CCTV camera and deduct fines from your Alipay account. Do it again? You might find yourself banned from the public transport system. No paperwork needed. Efficient and eco-friendly.
What to do?
Unfortunately, there appears to be no easy fix for this.
Obviously the longer we hold onto cash and continue to use it, the slower the transition will be to a complete digital system. Already we are seeing deliberate removal of cash machines and cash checkouts in supermarkets in order to try and push more people across to paying via card and such.
Gold and silver still have a historical precedence, physical value and practicality that should make them a decent temporary hedge against crazy currency inflation. Look up the value of an ounce of gold a hundred years ago and you will find that its buying power is similar to today. Good luck doing that with cash.
Owning physical objects (and preservable food) still has practical survival and exchange value for obvious reasons, and in the circumstances of a real collapse will trump pieces of gold and silver regardless of how shiny they are. I read somewhere from a guy who experienced social collapse somewhere in South America, who said that the best emergency trading item he had found was bic cigarette lighters. He bought a bunch of trays in bulk from Amazon before things got bad and he would exchange singles with people who needed some way to light candles while the power was out. Food for thought.
Ultimately, if you want to keep living in Disneyland, then eventually you’re going to have to play by Disneyland rules. Most people are sleep walking through life and don’t mind wandering wherever Walt Disney tells them to, and it’s not feasible to convince them otherwise.
For that reason, if you want to retain control over your own food, health and lifestyle choices, then the only real option is to move as much of your life into the private as you can. What is the ‘private’? Think private kitchens, private clubs, private membership associations and so on. Private groups are where people mind their own business, exchange with each other on their own terms using whatever medium of exchange they see fit, and go about their day.
Consider this – would the Amish really care if bitcoin and the US dollar went to zero? Not particularly.
