The Future of Money
The only reason banks continue to exist today is because of the laws that protect them. Since 2008, bank fines amounted to over $243 billion. Illegal deals, money laundering, price manipulation, banks are the cartel of finance. A monopoly on money that has been growing ever more burdensome to the global economy.
For decades, banks had mastered the art of extracting fees and rents from the people. And this happened because we got rid off the gold standard. People gradually shifted towards storing their gold in banks because of everyday convenience and security.
We invited them to our own monetary demise…
“Gold moved out of people’s hands and into the vaults of banks, and eventually, central banks. Under a gold standard, people held paper receipts in gold or wrote checks for it that cleared without physical gold having to be moved…” – The Bitcoin Standard”
Gradually as time passes on, the centralization of the wealth in gold made it easy for the government and banks to increase the money supply beyond the quantity of gold held. This is known as fiat money and it is expropriating wealth by devaluing its purchasing power from citizens.
The control of wealth of the people gave governments and central banks immense power. They became corrupt, arrogant and acquired an entitlement mentality:
JP Morgan CEO, Jamie Dimon, when accused by a Senator for illegal activities forcing taxpayers to bear the loss.
With a smile, he said “So hit me with a fine. We can afford it.”
Taxation and inflation destroyed the wealth and savings of the people. New generations come into the world with debt accumulated by their forebears. Enslaved by debt, they have no choice but to slave away their time and energy working in a job they hate.
People no longer had the capital to take entrepreneurial risk. Credit allocation goes out to unproductive people with politics being the name of the game.
Being aware of the consequences of saving in money that devalued over time, people started to spend more, taking on more debt to fund short-term activities that satisfied their immediate wants.
This is known as a “High Time-preference mentality.”
When the alternative to spending money is witnessing your savings lose value over time, you probably would enjoy spending before your money loses its value.
By constantly expanding monetary supply, central banks’ policy makes saving and investment less attractive while consuming more…
In a world where Bitcoin is our store of value and medium of exchange, we would experience an inversion of this behavior.
Bitcoiners have a very Low time-preference approach towards their economic well-being.
This is because bitcoins are scarce. And this effect makes it more valuable and desirable, attracting even more low time preference people to buy and hold onto Bitcoin.
HODLers spend only for what they need. They don’t live above their means.
This negates wasteful & self-destructive habits. Since more money isn’t being printed out of thin air, their focus isn’t on trying to make more money to keep afloat but to focus on what they’re good at to add value to society through diversity.
They don’t have to worry that their wealth is being stolen from them without their permission through the whims and fancies of politicians.
Patience and careful allocation of savings is a virtue when it comes to holding onto bitcoin, because it is very difficult or expensive to acquire them.
In a sense, creating more bitcoins isn’t wasted like in our current monetary policies.
The reality of society today is a widespread culture of conspicuous consumption, where people live their lives buying ever-larger quantities of cheap plastic crap they don’t need.
You’re being incentivized to consume, not to save for your future. And this worsens income inequality over time.
In economics, there is no such thing as a free lunch. Greed, power and zero accountability is turning everything upside down.
Banks are given the license to sell more debt for profit, privatizing the gains but then socializing the losses. Essentially creating more money out of thin air. As a result, they are financially obese without bringing in any real progress or innovation.
So much emphasis lies within politics and being in the right camp to advance personal ambitions and careers. These rent-seeking habits continue to rape our world off hardworking individuals who trade their limited time for money.
This is essentially a tax on all who hold the currency. These are the effects of unsound money.
Bitcoin is sound money.
Sound money is a prime factor in determining an individuals’ time preference. It influences decision making at the core cognitive level.
When people hold onto sound money, they are effectively reducing their time preference as they develop the scope for carrying out tasks over longer time spans.
The fisherman who builds a fishing rod is able to catch more fish than someone who tries to catch it with his bare hands.
Harry has a higher time preference than Linda. Harry chooses to only spend his time catching fish with his hands, needing about 8 hours a day to catch enough fish to feed himself for the day.
Linda, having a lower time preference, spends only 6 hours catching fish, making do with a smaller amount of fish every day, and spends the other 2 hours working on building a fishing rod.
After a week has passed, Linda has succeeded in building a working fishing rod. In the second week, she can catch in 8 hours double the the quantity of fish which Harry catches.
Linda’s investment in the fishing rod could allow her to work for only 4 hours a day and eat the same amount of fish Harry eats… – The Bitcoin Standard“
An inflationary monetary policy has created a society filled with high time preference individuals who work 9 to 5 for a paycheck similar to Harry.
Although well-intentioned, a paycheck is highly addictive.
For people at the bottom rungs of the economic ladder, a paycheck could mean food, clothing, shelter and warmth.
However, for top level executives earning more than enough to provide the bare necessities of life, they’ll start buying a snazzier car, move into a lavish home, get used to drinking $2,000 bottles of wine, but it’ll soon all seem routine and unexceptional.
A year after they doubled your salary, you are back to zero. Your brain had hedonically adapted to it and you’re now looking for the next thrill.
Consumerism tells us that in order to be happy, we must consume as many products and services as possible. And that’s what they feed you every single second of the day through the airwaves.
And it is quickly spiraling out of control. Look at the debt-to-GDP ratio of many developed nations with a burgeoning middle-class population that relies solely on their paychecks.
Billions of people scrolling down their Facebook and Twitter feeds being given carefully curated information, managed by AI algorithms, to reinforce their existing beliefs and tweak their dopamine receptors so they will buy more plastic crap from Amazon.
Whats more, obesity is a double victory for consumerism. People eat so much that they contribute to the economic growth twice over, specifically the healthcare industry.
All the diseases of modern life, are diseases of abundance, not scarcity.
A bunch of high time preference individuals don’t care very much about their future. They’ll spend and consume more and more, then deal with the consequences later on.
Saving and investing wisely would be the last thing on their minds. They want to get rich quickly to keep up with the Joneses, so they tend to fall for cheesy marketing gimmicks so prevalent (advertising, marketing sales channels, ponzi schemes) in modern society.
We’re overexposed to everything. Programming us to consume endlessly.
Banks in Denmark for example, are now offering customers a negative rate of interest to borrow money.
Yesterday I called my bank in Denmark, Nordea, and couldn’t believe what they told me…
They offered to lend me money at MINUS 0.12% for a ten-year mortgage.
In other words, the bank would PAY ME to take out a loan.
Of course, as a Sovereign Man editor, I’ve written a lot about negative interest rates. But most of these cases were always reserved for big banks or institutions.
That no longer seems to be the case…
Now, negative interest rates ARE the norm. Thousands, if not tens of thousands of Danes will go out and take out mortgages that will pay them every month.
This is completely mind-boggling to me. But it just highlights how broken the financial system really is.
Everything about this is in complete violation of the law of prosperity Simon Black’s been writing about for years: produce more than you consume and invest the difference.
Now, institutions and governments are incentivizing people to consume, instead of save. In fact, they’re paying people to go into debt.
That is not how prosperity is created. Instead of encouraging people to invest their surplus capital in productive investments, people are penalized for saving in the first place.
It’s like everything has been turned upside down.
Some of the most popular investments on the planet are the ones that burn the most cash (Tesla, Netflix, Uber, etc.)
Insolvent governments in Europe are able to borrow at negative yields, with no afterthought whatsoever as to the consequences.
And bankrupt governments like Argentina are able to borrow for 100 YEARS and pay next to nothing for it (even though Argentina went bankrupt twice in the last thirty years alone).
None of this makes any sense.
Here in Europe, bank deposits yield close to 0%.
In 2016, the Swiss government even asked its citizens to delay their tax payments as long as possible, because the government didn’t want to pay negative interest rates on those balances.
And in the United States, banks rob their customers blind time and time again by lying, stealing and deceiving them.
It’s extraordinary to me that these are the options we have with our money today.
In economics, there’s no such thing as a free lunch.
Like it or not, we’re going to have to ask for the check sooner or later.
What you see here are the effects of a world dying from over-consumption. It is the creed of all modern economies, consume and spend now to satisfy immediate wants.
Countries where we get all our source of cheap plastic goods so that we can enjoy the privilege and luxury of living in a clean and “environmentally conscious” society.
The Guardian reported recently that modern economies, ranging from the U.K., U.S, Australia and Canada have all been pushing mountains of rubbish to the shores of countries with lax regulation.
- Canada exported 69 containers containing 1,500 tonnes of waste to the Philippines in 2013.
- 3,000 tonnes of illegal imported plastic waste from the UK, Australia, US & Germany pouring into Malaysia
- In 2016, China processed at least half of the world’s exports of plastic, paper & metals including rubbish from the UK enough to fill 10,000 Olympic-sized swimming pools.
After China stopped accepting plastic waste and recycling from the rest of the world due to environmental outcries, richer countries had to look for poorer countries as alternative dumping grounds.
History shows us that it is not possible to insulate anyone from the consequences of climate change.
Earth is at the brink of irreversible destruction because of our habits.
You can shout and scream all you want, and try to suppress the rest of the 3 billion people living in poverty to stop growing and developing their economy.
Yell all you want, it’s not going to happen because they want to get out of poverty whether you like it or not. We’re all in this together.
Limitless economic growth based on consumption
There is a tension between short-term growth and our long-term survival.
Striking a balance between the two requires a new kind of mindset.
A mindset that prioritizes saving.
As hard money, Bitcoin incentivizes you to uphold such a mindset.
An asset that holds its value 1 BTC = 1 BTC now or in the future is highly preferable to an asset that loses it value over time. Savers who want to choose a store of value will naturally gravitate towards assets that holds its purchasing power over time.
Gold used to be the money of choice for the world, but because of gold’s physical heft, it ended up being centralized in the vaults of banks.
All for convenience and security of transacting paper money.
Well, in the end we all paid the price of convenience.
Over time, that made it possible for them to increase the supply of paper money beyond the quantity of gold they held, devaluing the money and transferring part of its value from the money’s legitimate holders to the governments and banks.
Even today, countries and governments continue to buy and hold vast gold reserves thanks to the ironclad rules of physics and chemistry.
Scarcity continues to be the cornerstone of all economic activity despite all their propaganda.
It demonstrates that you cannot violate the mathematical law of supply versus demand in any way.
That this finite material cannot be copied and duplicated out of existence by any man.
For Bitcoin, it is the first to achieve absolute scarcity in the digital economy.
We now have the convenience plus the technology to keep it out of the hands of any centralized third party.
We also have a hard cap on the supply of money (21 million btc), which is sufficient to measure any economy of any size because 1 BTC is divisible up to 8 decimal places 0.00000001 Bitcoins or 1 Satoshi.
Nobody wants to have in his cash holding a definite number of pieces of money or a definite weight of money; he wants to keep a cash holding of a definite amount of purchasing power… – Ludwig von Mises
If you just pause a moment to think about how all this would play out, it’s obvious that
Every time the world is introduced to something new, something weird and different, it meets with great resistance.
When cars were invented, everyone in the world thought it was crazy. “These noisy, ugly machines would probably kill us rather than be of any use.”
Why should we use these horrible machines when we have perfectly good horses?
Well, every time crazy pioneers of new technology pursues anything worthwhile, they get made fun off.
Today, some of those inventions, the automobile, plane, electricity, internet and Bitcoin.
The rest is history.
When you read about it 10 to 20 years from now, it will all seem like a smooth transition.
It will all seem obvious because hindsight provides clarity.
We’ve only just begun…
In the world of Bitcoin, there’s so much more to delve into. That’s why I created The Zodiac Collection, that tells the story of Bitcoin and the cryptocurrency revolution from every angle you can dream up.
There’s a lot of exciting stuff to read — I’ve selected a few of the stories, to start with, below.
To read a curated list of the most important crypto news stories each morning, subscribe for FREE. It will be everything you need to know, in your inbox, every day. No brainer 🙂
I certainly don’t want to overload your brain with the library of Bitcoin resources we have here.