Absolute power corrupts and absolute power corrupts absolutely. We, as humanity, can never allow any form of power ever to be consolidated into the hands of those politically minded.
Governments have, for centuries, engaged in “economic warfare” as an extension of political power. In the post-Roman Empire era, this conduct was limited by the physical limitations of the treasury. However, the creation of “fiat currency” removed this limitation on the “treasury”. Now we are seeing the actual end of this limitation due to decades of currency debasing conduct which is on the verge of causing hyperinflation. Any “currency” which relies on an uncollateralized governmental promise to pay retains its ability to default. A CBDC is no more valuable or secure than a printed currency. Factually, it is less secure and dangerous for many reasons. We will address the CBDC digital dollar/yuan in another posting. But with these basic statements made, let’s address the political issues of “money”.
A look back to look forward.
In the modern age, minted currencies often took the form of paper money, which does not have the same intrinsic value as coins made from precious metals. For a long time, the amount of gold backing paper money decided its value. Even today, some types of currencies rely on the fact that they are "representative," meaning that each coin or note can be directly exchanged for a specified amount of a commodity. The idea of a currency's value began changing in the 17th century. Prominent Scottish economist John Law wrote that “money” - currency issued by a government or monarch - is not the value for which goods are exchanged, but the value by which they are exchanged. In other words, the value of a currency is a measure of its demand and its ability to stimulate trade and business within and outside an economy.
The shift from “hard” asset to “faith in surety/stability”.
This thinking hews closely to the modern credit theory for monetary systems. In this theory, commercial banks create money (and value for currencies) by lending to borrowers, who use the money to purchase goods and services and increase the velocity of a currency's circulation in an economy. After countries abandoned the gold standard in an effort to curb concerns about runs on federal gold supplies, many global currencies are now classified as fiat. “Fiat currency”, as defined, is issued by a government and not backed by any commodity. Rather than possessing a “physical asset surety”, fiat currency’s value revolves around the “faith” individuals and governments have that the general public will accept the “fiat” currency in trade and exchange. This “faith” revolves around the illusion any issuer of the “fiat currency” has the ability to “pay” a holder of the fiat currency in some form of “physical asset” in the event the “debt” is called. All fiat currency is in essence a “debt” which is a “promise to pay”. (This brings rise to the question “Who really has faith in any ‘government’ in these modern times?”)
Increasingly, our economic theorists talk more about “consumer confidence” than they do about the “transfer of value” in trade. Why? This has more to do with the debasement of the American dollar and the ramifications of what happens to a society when its “method of exchange” becomes “worthless.” Future historians will likely be dumbfounded when they see how long people allowed worthless, unbacked fiat paper to pass as “money”. It is extraordinary that most people today happily accept a digital abstraction of a paper currency controlled by a single individual as “valuable”. This “faith in fiat” has no historical equal in human history prior to the creation of the “currency is money” scam.
And this brings us to why we can’t allow a political digital money to exist.
Back in the days when a king had to rely on how much gold was in the treasury, government was limited in its ability to engage in conduct that was often not in the best interest of the people. More often than not, these flights of fancy of kings and kingdoms were war, nation building, empire creation or many times fits of ego. The modern era saw a shift from monarchy to representative republics in the form of government. But, the flights of fancy of those in power stayed narrowly the same - war, nation building, economic empire creation and fits of ego. This time, in the name of political theory. The first World War saw this transition from monarchy to representation but interestingly, we also saw conflict develop over fascism, socialism, capitalism, communism and now terrorism. It seems any label to create divide was utilized by those in government as a ruse to hold or gain power.
Keeping this thirst for power in check has always been the limitation of resources. First, it was the amount of gold in the treasury, then it became the amount of currency in the treasury but the limiter has always been the same, namely the “volume of value”. Strictly speaking, the inability of those with a thirst for power’s ability to place their hands on the funds required to accomplish their ambitions. While today we decry the government’s constant printing of paper currency effectively debasing the treasury and causing inflation in the people’s daily lives - we, the people, seem trapped in a malaise unmotivated to change the rosters of political parties or diversify the political party’s powers by shattering what is effectively in the United States a two-party monopoly. Effectively, the only limit to the ambition of power is the measure of tolerance politicians fear the average voter possesses before the people make a change to the political system. This is the true check and balance between those who govern and those governed.
Recently, the Biden administration made a call to “lay the groundwork for the digital dollar”. The US Treasury is discussing “programmability” for each new digital dollar that effectively replaces the printed dollar. Imagine the ability to instantaneously create digital money then also be able to track every part of its movement individually speaking and then be able to transfer it or limit its use without the consent of the alleged ‘holder’ of the digital dollar. The volume of value has now been removed as the entire “money supply” is always in the hands of those who govern. That should scare anyone reading this document. Once printed money is released, it can only be tracked, seized, or transferred - it can never truly be controlled. Also, modern money is an instrument of debt, as will the digital dollar so is it rational to allow a debtor to have absolute control over their debt notes? No, it is not. That is why we advocate asset-backed digital forms of money the absolute control over wealth is always in the hands of the holder of the “money” and not in those who printed/minted/created the digital money.
Recently, we have witnessed the pollical weaponization of skin color, sexuality, gender and traditional forms of thought and moral values. In the past, as well as today, wars are fought over religion and basic ideologies of faith. We live in a world where people attempt to “cancel” other people and groups of like indoctrinated minds openly attack major segments of society merely based on their personal feelings. The inherent danger of weaponizing money and placing the control of the entire value supply in the hands of any small group of people is the greatest risk to the end of humanity that we have faced.
Nuclear war pales in comparison to the widespread and targeted destruction that could be waged by a politically controlled digital form of money. Not only is faith in this money non-existent, but the ability to weaponize a person’s wealth and then utilize this combined value at will is something that can never be allowed. Absolute power corrupts and absolute power corrupts absolutely. We, as humanity, can never allow any form of power ever to be consolidated into the hands of those politically minded. Humanity must always attempt to live in balance or it will cease to exist. We know that trade is peace and to have a peace-filled world, we must remove the power over wealth from government and return it to the hands of the peoples of the world.