Category Archives: Bitcoin

Bitcoin the Messiah: El Salvador Goes Crypto

In a particular deli store in South Melbourne, a tongue-and-cheek message is attached to the cash register.  “Bitcoin accepted there,” it proclaims brightly.  Naturally, it is nothing of the sort, a teasing ruse for the punters and those casting an eye in the direction of the store.  Cold hard cash remains king, albeit one with a tarnished crown; pandemic times have driven consumers towards such non-intimate transactions as contactless payment.

One country has decided to make using cryptocurrency a reality, sticking its neck out in adopting bitcoin as something akin to an economic messiah.  Few thought it would be El Salvador, whose government made the currency legal tender on September 7.  To mark the occasion, each citizen signing up to Chivo, the national digital wallet, has received US$30.  Foreigners adventurous enough to invest three bitcoins in the country are promised residency.

The introduction was far from spontaneous.  The surf town of El Zonte, with its Bitcoin Beach project, began an experiment to adopt the currency in 2018, a venture aided by the Californian cryptocurrency zealot Michael Peterson.  Through the Evangelical Christian church, Peterson combined God and crypto, proselytising the value of such currency.  Each local family received US$50, and the currency came to be used for such projects as rubbish collecting and lifeguarding.

Leaving aside Bukule’s own wish to mark the history books, this move into the world of digital currency has various motivations.  One is the portion of income received from international money transactions from citizens abroad, which amounts to something like a fifth of the country’s GDP.  With such transactions come high fees which whittle away the value of the transfer.  To this can be added the need for having a bank account.  (Only 30% of Salvadorans have one.)  Bitcoin alleviates any such need, while also facilitating cheap payments.

Then there is the prevalence of the US dollar, which is also accepted as legal tender.  President Nayib Bukele has been keen to give his citizens another option, a move intended to encourage greater expenditure in the country.  Over 200 bitcoin machines are being put in place across the country to convert cryptocurrency into dollars.

The introduction of such currency presents a paradox of mighty dimensions.  A degree of technological literacy is required, a challenge, to say the least.  The Bitcoin law stipulates that “the necessary training and mechanisms” will be supplied by the government to aid Salvadorans access bitcoin transactions.  This promises to be a herculean venture, given how many people actually understand how  the currency works.  A survey by the Central American University of 1,281 people found that a humbling 4.8% actually comprehended what the currency was and how it was used.  Of those, 68% took issue with using it as a legal tender.

The process of mining bitcoin is also a headache for policymakers, as it requires vast reserves of electricity and poses an environmental challenge.  (Elon Musk was at pains to emphasise the latter in reneging on his decision to permit customers to purchase Tesla cars using the cryptocurrency.)  The Cambridge Bitcoin Electricity Consumption Index, looking at figures generated last year, puts the amount of energy used by global bitcoin mining at 105 terawatt hours of electricity.

In June, the state-owned geothermal electric company was instructed by Bukele to come up with a plan to facilitate bitcoin mining “with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanoes.”

Then comes that testy issue of its status as legal tender.  Under general circumstances, currency deemed legal tender must be accepted as payment for a debt.  In the absence of a debt, the store owner, retailer or company may accept some other form of payment (credit card, online transactions).  El Salvador’s Bitcoin law, however, has muddied matters by stating that “every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.”

Such financial coercion did not sit well. It caused a flurry of protests.  Economists squawked in alarm.  President Bukele had to relent, issuing a grumpy clarification last month that businesses would not be compelled to accept bitcoin.  In doing so, he could not resist a snarky remark that those not seeking to win over customers with the currency were essentially discouraging growth and continuing the daft practise of paying fees on remittances.

The forces of orthodoxy have also balked.  When asked for assistance by El Salvador to implement the bitcoin scheme, the World Bank was dismissive.  “While the government did approach us for assistance on bitcoin,” a spokesperson revealed in June, “this is not something the World Bank can support given the environmental and transparency shortcomings.” The International Monetary Fund, severe as ever, disapproves of a currency that presents “macroeconomic, financial and legal issues that require very careful analysis”.

The response to the introduction has been fairly predictable.  Bond prices have fallen and bitcoin’s value has fluctuated.  The naysayers suggest that the general adoption by residents will be small, fearing the currency’s volatility.  Protestors fear that the cryptocurrency will simply enable further corrupt practices to take place.

The converse may also be true: given Latin America’s long history of fiscal instability, banking collapses, and failed economic advisors, bitcoin promises an unorthodox form of insulation from shock.  “With bitcoin, for the first time in a very long time, people in Latin America saw an asset appreciate in dollar terms,” Mauricio Di Bartolomeo, chief executive of the Toronto-based digital asset company Ledn remarked.  The time for this experiment, on the surface a quixotic one, is nigh.

The post Bitcoin the Messiah: El Salvador Goes Crypto first appeared on Dissident Voice.

Bitcoin: Nature’s Money That Can Save Our Civilization

The Covid-19 pandemic that blazed across 2020 has thrown the world into disarray. Economic damage that has triggered the breakdown of the system signals a dire need for change. As the old system is getting dismantled and global leaders jump in to fix the problems, Bitcoin is now gaining traction, increasing in price and welcoming new users everyday.

Bitcoin, invented during the financial crisis in 2008, is free from the central authority of governments and banks. In its 12 years of existence, the technology, with its unique feature of censorship resistance and permissionless use, has allowed people to store value securely and transact with one another freely in a way that is unprecedented in human history.

Born and raised on the internet, Bitcoin is stateless money that is now even considered to be the best candidate for the world reserve currency. Some see the significance of this innovation and its impact that goes beyond finance. Billionaire hedge fund manager Paul Tudor Jones, who became bullish on Bitcoin in 2020 remarked, “A bet on Bitcoin is a bet on human ingenuity”.

The issues that we are now facing, from poverty and climate change to conflicts among nations and human rights abuses are global, and cannot be resolved by any one country. In this article I will argue how Bitcoin is a gift for humanity that can help ordinary people around the world to work together collaboratively to meet those challenges, and is perfect money that can guide us into the next stage of our civilization.

Rejection of Nature’s God

The roots of the problems that now confront humanity have to do with our modern world’s loss of its connection to nature. We now have created a highly technological civilization and our way of life has become out of tune with the natural world.

Society’s separation from nature is traced back to the birth of the modern nation-state. The major events that broke civilization’s harmony with nature took place in the continent of North America when European settlers encountered Indigenous peoples. Back then, a true meeting of cultures did not occur. The possibility of creating a civilization through dialogue, by opening and integrating other perspectives did not happen.

Led by the God-ordained manifest destiny, European colonists crusaded toward the westward expansion. They destroyed the life of the indigenous people and their culture and they declared nature dead. Philosopher Jacob Needleman (2002) elucidated how in their conquest of the land, men who were influenced by Enlightenment ideas failed to understand the indigenous culture that “was resting on a different state of consciousness than does our modern civilization” (p.202), one that was more deeply connected to the earth.

This placed America in the trajectory of its development away from the original vision that lived in the land. At the time of the revolt against the British monarchy, Thomas Jefferson acknowledged in the Declaration of Independence that the separation of 13 colonies from Great Britain was entitled by “the Laws of Nature and of Nature’s God”. In their assault on nature, founders of the constitutional republic betrayed the ideals that inspired their own independence, and denied the source of legitimacy that granted them their sovereign existence.

American monotheism

In America, the New World, that promised to liberate people from the arbitrary power of the King, a force of monarchy – the political system based upon the rule of a single figure has quietly persisted. In establishing the US constitutional republic, there was recognition of the importance of the state’s ability to function independently, free from church’s influence. This was articulated by Jefferson’s concept of a “wall of separation” between church and state, and was placed in the Establishment Clause of the First Amendment, as the premise of religious freedom that prohibits the government from either advancing or hindering religion.

Despite this safeguard against the creation of a church-state, the European colonists’ unconscious bias against the indigenous people’s way of life and a relationship to the land that was radically different from theirs, influenced the establishment of a predominant religion in America.

Jungian psychotherapist Rafael López-Pedraza (1990) noted how the Bible has become a basis of religious belief of Westerns and described its essence as “monotheism: the worship of one God, and the jealousy and wrath of that God if any other is worshipped” (p. 29). To the frame of mind shaped by Judeo-Christian tradition, Native American tribes’ animistic worldview that regards all things –animate and inanimate possessing a living spirit as an embodiment of the divine was considered primitive and inferior.

This European’s one-sided beliefs and attitudes, without having been carefully examined, formed a religion of American monotheism. The federal government worked to enforce this national religion by confining Native Americans to reservations, banning them from practicing their worship of nature, ceremonial dances, and rituals that were deeply woven into their everyday life. In the name of assimilation, their children were put in boarding schools and those First Nation people were made to adopt European cultural values including conversion into Christianity.

The doctrine of materialism

One god that has now occupied America denounces the supernatural world that underlies the natural world. It preaches the doctrine of materialism – a belief that only the things that can be perceived through external senses exist, and denies the reality beyond physical.

The republic, under monotheistic persuasion has charted a path of development that stands in opposition to nature and measures its progress through the advancement of physical comfort. In this, money became an instrument for the ruling elites to maintain their exclusive control over people’s choices of faith.

The US dollar that was declared as legal tender by government decree, with the symbol of the Eye of Providence watching over humanity began to circulate across the nation. Later, through the creation of the Federal Reserve in 1913, private corporations took the power to create money away from the government.

Central banks have become the overlord to remake the world according to its own image. Economists, with the idea of unlimited growth and the concept of gross domestic product (GDP), began their evangelism to promote a materialistic view of the world.

The invention of GDP

The GDP was created as a common denominator to assess the health of the nation’s economy. It is defined as “the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.” This concept has transformed economics into empirical science.

Physician and activist Vandana Shiva spoke how the GDP was invented during the war as a part of the war machine, and was used by economists as a weapon to support war economy. She explained how the GDP which was called the “Manhattan Project” of economics, creates a very artificial production boundary that says “If you produce what you consume you don’t produce”.

Shiva noted how nature produces and consumes in an amazing cycle that sustains life, yet according to this arbitrary defined growth measure that excludes economic activities such as services and goods for personal consumption, this nature’s regeneration is treated as non-production.

The GDP as a key concept in economics was used to create a Pyramid Ponzi scheme that extracts from nature, turning it into lifeless objects to increase the material wealth of those on the top. It is a system of enslavement, in which people are deprived of their ability to produce for themselves and be self-reliant. Instead, they are made to depend on large corporations to deliver the goods and services that they need.

Creation of model citizen

This plunder economy has been accelerated by 21st century consumer capitalism. The state sponsored orthodoxy of materialism denied the internal life of man, making people find value and meaning outside of themselves. Through sales marketing with advertising and branding, big business found a way to create in people a desire for consumption, and manufacture a need for mass production.

Through Hollywood, celebrities became idols for people’s worship. With their glamour, they presented to the public the myth of American Dream that promises everyone equal opportunities to achieve a materially affluent lifestyle. One by one, people were lured into the market, and began to look for meaning through material acquisition.

This abstract concept of the GDP that now drives this consumer economy has been used to set a standard for a model citizen. Now the market sends a message; ‘the more one engages in mindless consumption, the more one contributes to the increase of the GDP and becomes virtuous’.

Guided by the invisible hand of this engineered market that incentivizes passivity and obedience, people were made to chase after products striving to become good citizens, to be accepted and be recognized as being valuable.

Petrodollar hegemony

While keeping people insulated in a bubble of consumer culture, the US government under the thumb of private corporations carried on their missionary work around the globe to advance the dominance of their single-minded faith. In 1933, the US abandoned the gold standard for domestic transactions. Then, through the Bretton Woods Agreement in 1944, the dollar was accepted as the international currency for most trade.

What appeared to be the final victory of supremacy of matter over nature came in 1971 when President Nixon severed the final link between the dollar and gold, by ending international convertibility of the dollar to gold. All those developments led to the creation of the petrodollar, a hegemony of one currency backed up by the military, which was acknowledged by Nobel prize-winning economist Paul Krugman’s telling comment that US fiat currency is “backed by men with guns”.

The all-seeing eye of the godhead that floats at the top of the currency index has a limited vision. It can only see a mechanistic view of the future, and aims to create a world of machines that enslave humanity. In its own self-righteous American exceptionalism, one nation under a single god acts as if it is the absolute moral authority of the world.

Crisis of the Western view of the world

With an abstract sense of moralism that creates a duality of evil and good, the US empire projects external enemies. By creating the axis of evil with lies of weapons of mass destruction, the nation with the most powerful military power spreads fear and hatred, keeping the world under a perpetual state of war.

With an edict of “You’re either with us or against us”, the superpower state divides the world, coercing all to accept the doctrine of War on Terror. They demonize countries that challenge their petrodollar moral superiority and ostracize them from the international community, subjecting them to sanctions and military invasion.

In ways other than outright violence, this tyrannical god weaponizes finance against innocent people. Calling it “Jihadi of banking”, Max Keiser, a host of a popular show that reports on finance explained how the heads of central banks commit fraud and blow up the economy. He described that they are trained in madrasa of Ivy League schools, and they misinterpret Adam Smith and use it instead of the Koran as a religious pretext to commit “financial terrorism”. They lower interest rates for investors, allowing large companies to take away jobs and people’s livelihood, and destroy the whole economy.

As the expansion of West’s single vision of the world became destructive, its extractive war economy now meets the earth’s finite reality. As the end game for their money printing nears and world leaders frantically try to reset the system to bail out their god, Bitcoin has begun to shine a light on a new path where the materialistically driven civilization reaches its limit.

Separation of money and state

The invention of Bitcoin made the separation of money and state for the first time possible in history. This ended the oligarchy’s monopoly of faith that denied people an access to a true nature of reality, and freed people from the moral insanity that has turned the world upside down.

This breakthrough in computer science revived Nature’s God that has been made to disappear from our society. Bitcoin is money backed by nature. While fiat money is debt-based and subject to printing at will through ‘fractional reserve lending’, Bitcoin is a new asset class and as a digital gold, it has intrinsic value derived from energy that is required for computational work, in a way no different than the energy used to dig gold from the ground.

Unlike the US dollar that infinitely expands through the money printing press, Bitcoin with its fixed monetary supply of 21 M has a built-in scarcity being tied to real resources. In the article “Bitcoin and thermodynamics”, author Kunt Svanholm described Bitcoin as a battery, one that was the best ever invented. He noted how Bitcoin “offers a way of converting energy into a small part of a specific number”. He describes it like a kind of “mathematical battery” and how it converts electricity into digital scarcity”, which “then can be programmed to express value”.

The world’s truly free market

At the heart of creation of this mathematical battery is Bitcoin mining. It is a broadcast math competition engaged by a network of computers (called miners) around the world with clear rules including the total number of bitcoin created and a predictable issuance rate. In a decentralized network where rules are applied to everyone equally, miners use their precious resources (harnessing computational power) to engage in Proof of Work- a process of solving difficult mathematical problems.

With economic incentives that align everyone’s self interest and make the rewards for playing by the rules higher than the value of attacking the network, it incentivizes all to act honestly and follow the rules of consensus. Every 10 minutes, a math problem is solved and whoever solves the problem first wins a fixed number of bitcoins. This process creates bitcoin, clears transactions, and most importantly provides the security of a system.

The creator of Bitcoin known by the pseudonymous name Satoshi Nakamoto used bitcoin as a token of value and with a combination of cryptographic hash functions and game theory created the world’s first truly free market. While economists with their modern monetary policy insulated the market from any feedback, Bitcoin regulates itself algorithmically and enables organic price discovery.

The market adjusts mining difficulty according to demand with a tight feedback loop that resets every 2 weeks. It is programmed to regulate and maintain the rate of bitcoin creation, and corresponds more naturally with the demand and supply of the market, creating efficiency in the market. This brings an alternative to the existing model of economy based on the idea of infinite growth that creates a destructive cycle of endless consumption.

Nature’s economic standard

Bitcoin introduces a new economic standard that is different from a gold standard or any other economic models that came before. Mathematics that is enlivened through imagination reunites matter that has fallen from its original source.

With Bitcoin, money becomes energy. At the kernel of Bitcoin capital is the production of the mathematical battery. It is based on non-material consumption in the form of energy and this process is facilitated by nature’s act of giving.

Nature provides abundantly. With her selfless love, she both produces and consumes to regenerate energies. Bitcoin invites us to participate in an economy in a manner such that we all live up to this nature’s standard of altruism.

The genesis of Bitcoin was Satoshi’s generous act of releasing the open source protocol online and making it freely available to anyone in the world. In responding to this act of altruism developers around the world brought their skills and intelligence to work on Bitcoin. Miners began contributing their precious resources to build a network.

This creates a new model of economy based on reciprocity, in which everyone makes a contribution to the network through voluntarily sharing his or her labor, time and resources and mutually benefit from each other’s gifts.

Individual sovereignty

Bitcoin, with its new economic standard, now frees us from the orthodoxy of materialistic economics and its scientific dogma of infinite growth that keeps people as passive consumers in the global debt Ponzi scheme. Globalization has created a race to the bottom where transnational corporations that do not have allegiance to any nations have abandoned workers, by shipping jobs and manufacturing bases overseas, and lowering costs with cheap labor to maximize their own profit.

As people become indentured servants being exploited in corporate feudalism, Bitcoin restores the sovereignty of people and nations, allowing them to claim their power to actively engage in economy on their terms. The ecosystem fueling innovation and entrepreneurship has created opportunities for people to exit from this autocratic fiat control system that keeps them in slavery and steals from their labor. Many are able to walk away from 9-5 jobs and start up their own businesses to create values and share with one another through trade.

Now, through a network of free and sovereign individuals around the world, Nature’s God begins to reveal itself as the supreme judge of the world. New economic activities that are emerging around this technology are creating a currency of revolt like a Tsunami against a warmongering god, whose legitimacy is backed by violence.

The “survival of the fittest” brutal mining market, channeling energies that have been funneled into weapons manufacturers, begins to defund the Pentagon and move a global society into building peace. From Iran to Kazakhstan and Russia, nation-states have now joined the Bitcoin mining race, accelerating the non-violent destruction of the military industrial complex. The hash power generated largely by renewable energies, being subordinated to the laws of thermodynamics began to secure sanctity of life for all beings.

Perfect money for humanity

Founders of nation-state treaded the path of developing a civilization that was divorced from nature. Modern man has become estranged from the world that birthed him. But this separation was necessary. The act of rebellion against Nature’s God was the right entitled by Laws of Nature, granted to everyone in order for each of us to become independent and free.

Now, through Bitcoin’s computer programming language, nature that has become silent begins to speak again. Each 10 minutes, through distributing accountability across the network, the heart of Bitcoin performs checks and balances of power keeping a harmony among all living beings.

The Internet of Money transcending borders protects people of all nations from resource wars, exploitation and dictatorship. Bitcoin surrounding us everywhere 24/7 can guard us against hyperinflation, theft and wealth confiscation, helping us steward this precious planet for the Seven Generations to come.

For so long, we have tried to compete and outsmart nature. Now, the pristine protocol of Bitcoin calls us to become a co-creator with Mother Nature and invest in her wisdom to engineer a new civilization. As the old fiat world begins to collapse, Bitcoin now provides a superior form of money that is secure, censorship-resistant, and self-sustaining. It is perfect money for humanity, for we are a part of the divine nature and that we are all Bitcoin.

The post Bitcoin: Nature’s Money That Can Save Our Civilization first appeared on Dissident Voice.

Will the IMF, FED, Negative Interest and Digital Money Kill the Western Economy?

The IMF, has been instrumental in helping destroying the economy of a myriad of countries, notably, and to start with, the new Russia after the fall of the Soviet Union, Greece, Ukraine and lately Argentina, to mention just a few. Madame Christine Lagarde, as chief of the IMF had a heavy hand in the annihilation of at least the last three mentioned. She is now taking over the Presidency of the European Central Bank (ECB). There, she expects to complete the job that Mario Draghi had started but was not quite able to finish: Further bleeding the economy of Europe, especially southern Europe into anemia.

Let’s see what we may have in store to come.

Negative interest, we have it already. It’s the latest banking fraud stealing money from depositors to give to large borrowers. It’s a reverse cross-subsidy, the poor financing the rich. That’s the essence. It’s a new form of moving money from the bottom to the top. Now, a Danish bank has launched the world’s first negative interest rate mortgage. It provides mortgages to home owners for a negative rate of 0.5%. The bank pays borrowers to take some money off their books. Of course, as usual, only relatively well-off people can become home owners and benefit from this reverse cross-subsidy. It is a token gesture, duping the public at large into believing that they are benefitting from the new banking stint. The bulk of such operations serve large corporations.

The borrower pays back less than the full loan amount. Switzerland may soon go into the direction of Denmark. Bank deposits with central banks pay negative interest almost everywhere in the western world, except in the US – yet. It’s only a question of time until the average consumer will have to reimburse the banks for their central bank deposit expenses, meaning, the customers are getting negative interest on their deposits. That’s inflation camouflage. A sheer fraud, but all made legal by a system that runs amok, that does not follow any ethics or legal standards. A totally deregulated western private banking system, compliments of the 1990s Clinton Administration, and, of course, his handlers. As Professor Michael Hudson calls it, financial barbarism. We are haplessly enslaved in this aberrant ever more abusive private  fiat money banking shenaniganism.

RT’s Max Keiser recently interviewed Karl Denninger of Market-Ticker.org. Denninger told Keiser:

Negative yielding bond is forced inflationary instrument: you buy it, you’re guaranteed inflation in the amount of a negative yield.

He blasted the tool as plain “theft” by any government that issues these bonds, which is done in an effort to nominally expand a country’s GDP.

If the government is issuing more in sovereign debt their GDP is expanding in nominal terms. If you have negative interest rates on those government bonds, you’re creating excess space for the government to run the fiscal deficit […] in excess of GDP expansion. Nobody in any civilized nation should allow this to happen because it is theft, on the scale of that differential, from everybody in the economy,

To make sure the little saver doesn’t think about depositing his savings under his mattress or in a hole in the ground instead of bringing it to the bank, money will be digitized and cash will disappear. Madame Lagarde has already more than hinted at that, when she gave a pre-departure speech at the IMF – explaining on how she sees the future of monetary banking. The future, according to her, being no more than 15 to 20 years away, is a no-cash society. Just enough time for the elder generations, those that may still feel an instinct of rejection and have some consciousness about personal privacy, those that may resist money digitization, may have died out. The young, up-and-coming age groups may be brainwashed enough to find a cashless society so cool.

Since Madame Lagarde is moving to head the ECB in Frankfurt, it is fair to assume that Europe will be one of the largest test grounds for digitized money; i.e., towards a cashless society. In fact, it is already a test ground. Many department stores and other shops in Nordic countries — Sweden, Norway, Denmark, Finland — do no longer accept cash, only electronic money. In Denmark already up of 80% of all monetary transactions are made digitally.

Imagine, for your chewing gum wrapper, pack of cigarette, or candy bar, you swipe a card in front of an electronic eye, and bingo, you have paid, not touching any money – “that’s mega cool!”.  That’s what the young people may think, oblivious to leaving a trail of personal data behind, among them their bank account details, their GPS-geared location, what they are shopping, a pattern of data that is in ten years-time expected to amount to about 70,000 points of information about an individual’s characteristics, emotions, preferences, photos, personal contacts… what Cambridge Analytica in the superb documentary “The Great Hack” revealed as already today on average 5,000 points of data per citizen. The system will know you inside out better than you know yourself. And you will be exposed to algorithms that know exactly how to influence every action, every move of yours. Cool!

That, combined with face recognition which is advancing rapidly around the globe, will be super cool.

A horrendous trial on how an entire country, India, with the world’s second largest population, may react to demonization, was introduced in 2016 by President Modi, bending to the pressure of the western financial system, with support of the IMF and implementation funding by USAID. It amounted in a disastrous and cruel demonetization, invalidating almost over-night the most popular 100 Rupee (Rs) bank note, replacing it with a 200 Rs note which in most places, especially in rural towns, where banks are scarce, was not available. Never mind that less than half of the Indian population has a bank account, where the bank note exchange transactions had to be carried out.

The sudden disappearance of the most popular bank note – more than 80% of all monetary cash transactions in India took place in 100 Rs notes – was a proxy to digitization of money. Countless people starved to death especially in rural areas, because their 100 Rs were declared worthless and became unacceptable to buy food.

The 340,000 citizens of Iceland have already a fully digitized e-ID, now moving towards a mobile ID; i.e., accessible through your smart phone uniting every possible data that belongs to you, from medical records to insurance policies, all the way to dog, cat and car registrations. You name it. Most say they trust their government and are not unhappy with their divulging their most intimate data. Many have no or little idea, though, to what extent the private sector is involved in setting up such a hermetic countrywide data bank for the government. Even if the regulator is within the government and you trust your government, how much can you trust the profit-oriented private sector in protecting your data?

The surveillance state that you, among other clandestine intrusions into your privacy, will allow by willy-nilly accepting digitization of money, and eventually digitization of your entire private data, pales Orwell’s imagination of “1984”. Every citizen is registered in every western “security agency’s” electronic data bank, and, of course, those of the empire and Middle East affiliate, Israel, CIA, NSA, FBI, Mossad, and so on.  No escaping anymore.

It just so happens that you, dear citizen, are oblivious to all of what is going on behind your back, since your attention will be captured by massive marketing and directed towards the nefarious machinations of the corporate elite-ruled, globalized world, making you an eternal and ever-more intense consumer. You must spend the last penny of your income on trendy stuff, all those fashion things that will be pumped non-stop day-in-day-out into your brain, what’s left of it, by propaganda on television, radio, electronic cartoon-like billboards, internet, and that at every turn you take. And let’s not forget sports events.  They increase every year and are the most direct deviation tactic take-over from the Roman Empire.

The most aberrant trends will be cool, like shredded jeans, for which you pay a premium, body-paintings called tattoos, footballer hair styles, because they are fashionable and your looks are key to fit into a standardized, globalized society that has seized thinking for itself, no more interest in politics, in what your non-democratically elected representatives decide for you. It’s what Noam Chomsky calls the marginalization of the populace.

You are made to believe that you are living in a democracy where you can do what you want, shop what you want, watch what you want, and even when the elections or occasional referenda are offered to request your opinions, you are cheated into believing your choice is free. Of course, it is not. It is all programmed. Algorithms drawing on your profile of 70,000 points of information on emotions, desires and dreams, will clandestinely help the ‘system’ to enslave, cheat and master you, and you won’t even notice.

That’s where we are headed, largely thanks to digitalization of money – but not only, because surveillance will also follow all your steps on internet, on Facebook, Twitter, Instagram, Whatsapp – and many more of those especially created marketing tools, implanted in societies’ social media, that make life and communication so much easier.

And there is more to digital money. Much more. In 2014, the unelected European Commission (EC) has put on its books of regulations, following a similar decree in the US, the rule that an overextended bankrupt too-big-to-fail private bank will no longer be rescued by the state, by your tax money – which used to be called a “bail-out”. Instead, there will be “bail-ins”, meaning that the bank will seize your deposits, your savings and sanitize itself with money stolen from you. You have no choice. There will be no ‘run on the banks’  because there is no cash to withdraw. We have seen signs of this when Greece collapsed after 2010, and cash machines spitting out no more than 20 € per day, if at all. For many Greek citizens, especially the poorer class living from day to day, this meant often cruel starvation.

Bail-ins are little talked about, but they happen already today and ever more so. In 2014, the Austrian bank Hypo Alpe Adria – the Heta Asset Resolution AG, was given green light by the Austrian Banking Regulator, the Austrian Financial Market Authority (FMA), to refinance itself by a so-called “haircut” of an average 54%, meaning, stealing 54% of depositors’ money.

But the first and largest “haircut” test took place in Cyprus, when in 2013 the Bank of Cyprus depositors lost about 47.5% in a “haircut” to bail out their bank. Of course, the big sharks were forewarned, so they could withdraw their money in time and transfer it abroad.1

It could get worse. The state, tax authority, an institution, a corporation says you owe them money which you deny, possibly for a good reason, but they have access to your bank account and just seize the amount they pretend is their due. You are powerless against these tyrannical monsters and may have to hire expensive legal service to get your stolen money back if at all. Because the “system” is run by the “system”. And once that level has been reached, a form of Full Spectrum Dominance, a key target of the PNAC (Plan for a New American Century), there is hardly any escaping. That has all happened already, in front of our publicity-blinded eyes, little spoken about, the trend is growing and this even without necessarily a digitized world.

Is it that the kind of society you want?

Then there are the rather prominent gurus who bet on gold and bitcoins to replace the faltering dollar, like a last-ditch solution. None of them is any more viable than the fiat dollar. Gold is highly volatile due to its vulnerability for manipulation – as it is largely controlled by the BIS (Bank for International Settlement, in Basle, Switzerland, also called the central bank of all central banks, and yes, the same bank that helped the FED finance Hitler’s war against the Soviet Union.  (So you see where this bank is coming from.) It is entirely privately owned and largely controlled by the Rothschild clan. And as an associated side note — few people talk about it — there is in excess of 100 times more paper gold in circulation than you could ever cash in, if you needed it. It is another one of those bank-invented ‘derivative’ bubbles that will explode and serve to enrich them when the time is ripe.

Bitcoins, the most prominent of some 3,000 to 4,000 cryptocurrencies flooding the world, is totally unreliable. A year after it was created in 2008 allegedly by an unknown person or group of people using the name Satoshi Nakamoto, bitcoin’s value in 2009 was US$ 0.08, It gradually rose and eventually jumped in December 2017 briefly above US$ 20,000, but dropped within a year to about US$ 3,500. Today bitcoin is hovering around US$ 9,500 (August/September 2019). Bitcoin – along with other cryptocurrencies – is highly speculative, lends itself to Mafia-type money-laundering and other fraudulent transactions. It is about equivalent to fiat money and certainly inept to be the backing for a monetary system.

And let’s not forget, the latest Facebook initiative — a cryptocurrency, the Libra, to be launched in 2020 out of Geneva, Switzerland – is expected to dominate within a few years 70% to 80% of the international money market. You see, the same clan that has been manipulating and cheating you with the dollar, is now ‘banking’ on you falling for the Facebook currency  as it will be so easy to use your smart phone for any kind of monetary transaction, thus, avoiding traditional predatory banking. Looks like a good thing at the outside – right? – Nope! It’s entirely privately owned and run by an unscrupulous mafia that is being set up to continue milking the masses for the benefits of an ever-smaller elite.

There is ,however, a role for blockchain cryptocurrencies, to circumvent private banking, those that are government controlled and regulated. China and Russia are about to launch their government-controlled cryptocurrencies and others – Iran, Venezuela, India – are following in the same steps. But they all ban privately run cryptocurrencies in their countries and rightly so. A combination of government-regulated blockchain cryptos and public banking, where no private profits are in the fore, but rather the well being of the citizen and the country’s economy, may be a viable solution into a new monetary scheme, protected from the kleptocracy of western banking.

Desperation about the dollar losing its world hegemony is growing – and growing fast. To salvage the western fiat monetary system, Madame Lagarde and others are also talking about some kind of Special Drawing Rights (SDR) to replace the dollar as a reserve currency, since there is no escaping – the dollar as reserve currency is doomed. The current IMF SDR basket consists of five currencies, the US-dollar (weighing 41.73%), the British Pound (8.02%) the Euro (30.93%), the Japanese Yen (8.33%) and since 2017 the Chinese Yuan, the currency of the world’s largest economy compared by Purchasing Power GDP (10.92%).

At this point thinking of any reshuffling of the SDR basket’s contents is purely speculative. However, it can easily be assumed that the dollar would remain in a very prominent position within the basket, as it should remain the leading hegemon of world economy. Let’s not forget, the US Treasury controls the IMF with an absolute veto, in other words, 100%. It can also be assumed that the Chinese Yuan would either be kicked out altogether or would be given a minor weight in the basket so to diminish its role. If this was to become the chosen option by the US Treasury, it could and probably might prompt China to withdraw the Yuan from the SDR basket, as the Yuan does no longer need SDR recognition in the world to be considered a primary reserve currency.

Unless this is stealthily done — outside of public sight and in disguise of countries still holding major US-dollar reserves — the world would unlikely accept such an alternative, especially since it is widely known among treasurers of countries around the globe that the Chinese Yuan is rapidly raising to become the key world reserve currency.

As reported by William Engdahl’s analytical essay “Is the Fed Preparing to Topple the US Dollar?”, the outgoing Governor of the Bank of England, Mark Carney, delivered at the recent annual meeting of central bankers in Jackson Hole, Wyoming, a set of ideas that went into a similar direction, towards a shift away from the dominant role of the US dollar as a reserve currency. Similar to Mme. Lagarde’s earlier remarks about an SDR-type reserve currency, he made it understood that though the Chinese Yuan, the currency of the key trading nation, may have a role in the basket, it would – for now – not be an important one. He also was clear about the current disturbing and destabilizing imbalance where a faltering dollar still pretends to hold the hegemonic scepter over the world economy.

Keeping the dollar still in a leading role, while the US economy is declining, was no longer a viable option for an increasingly globalized world economy. Carney was hinting at a multipolar monetary and reserve system for a multipolar globalized world. Similar remarks came from former New York Federal Reserve Bank chief, Bill Dudley. However, Dudley, hinted that for the United States to give up her dollar dominance, the backbone for her world hegemony, may not come voluntarily. Might that lead to a major, maybe armed world conflict?

Much of this is speculation from the western perspective. It is, however, clear that there is a tremendous and mounting uneasiness about the western dollar-based fiat monetary system, backed by nothing, not even by the western economy. You compare this with the Chinese Yuan and the Russian Ruble, both backed by gold and – more importantly – by their own economy. It becomes increasingly clear that much of the speculation and efforts by influential central banking figures to save the western monetary Ponzi scheme maybe just propaganda to calm the minds of western financiers – holding them back from jumping ship.

• First published in New Eastern Outlook (NEO)

  1. See: Peter Koenig: “Infringing upon the Eurozone’s Sovereignty on behalf of Wall Street.  The EBC’s “Haircut” Measures, Undermining Trade and Investment with Russia and China“, Global Research, November 7, 2015; and Peter Koenig, “Retrenchment, Robotization and Crypto-Currencies: The Runaway Train Towards Full Digitization of Money and Labor“, Global Research, December 27, 2017.

Libra: Facebook’s Audacious Bid for Global Monetary Control

Payments can happen cheaply and easily without banks or credit card companies. This has now been demonstrated – not in the United States but in China. Unlike in the US, where numerous firms feast on fees from handling and processing payments, in China most money flows through mobile phones nearly for free. In 2018 these cashless payments totaled a whopping $41.5 trillion; and 90% were through Alipay and WeChat Pay, a pair of digital ecosystems that blend social media, commerce and banking. According to a May 2018 article in Bloomberg titled “Why China’s Payment Apps Give U.S. Bankers Nightmares”:

The nightmare for the U.S. financial industry is that a technology company—whether from China or a homegrown juggernaut such as Amazon.com Inc. or Facebook Inc.—replicates the success of Alipay and WeChat in America. The stakes are enormous, potentially carving away billions of dollars in annual revenue from major banks and other firms.

That threat may now be materializing. On June 18, Facebook unveiled a white paper outlining ambitious plans to create a new global cryptocurrency called Libra, to be launched in 2020. The New York Times says Facebook has high hopes that Libra will become the foundation for a new financial system free of control by Wall Street power brokers and central banks.

But apparently Libra will not be competing with Visa or Mastercard. In fact, the Libra Association lists those two giants among its 28 soon-to-be founding members. Others include Paypal, Stripe, Uber, Lyft and eBay. Facebook has reportedly courted dozens of financial institutions and other tech companies to join the Libra Association, an independent foundation that will contribute capital and help govern the digital currency. Entry barriers are high, with each founding member paying a minimum of $10 million to join. This gives them one vote  (or 1% of the total vote, whichever is larger)  in the Libra Association council. Members are also entitled to a share proportionate to their investment of the dividends earned from  interest on the Libra reserve – the money that users will pay to acquire the Libra currency.

All of which has raised some eyebrows, both among financial analysts and crypto activists. A Zero Hedge commentator calls Libra “Facebook’s Crypto Trojan Rabbit.” An article in FT’s Alphaville calls it “Blockchain, but Without the Blocks or Chain.” Economist Noriel Roubini concurs, tweeting:

It will start as a private, permissioned, not-trustless, centralized oligopolistic members-only club. So much for calling it “blockchain”. … [I]t is blockchain in name only and a monopoly to extract massive seignorage from billions of users. A monopoly scam.

Another Zero Hedge writer calls Libra “The Dollar’s Killer App,” which threatens “not only the power of central banks but also the government’s money monopoly itself.”

From Frying Pan to Fire?

To the crypto-anarchist community, usurping the power of central banks and governments may sound like a good thing. But handing global power to the corporate-controlled Libra Association could be a greater nightmare. So argues Facebook co-founder Chris Hughes, who writes in The Financial Times:

This currency would insert a powerful new corporate layer of monetary control between central banks and individuals. Inevitably, these companies will put their private interests — profits and influence — ahead of public ones. . . .

The Libra Association’s goals specifically say that [they] will encourage “decentralised forms of governance”. In other words, Libra will disrupt and weaken nation states by enabling people to move out of unstable local currencies and into a currency denominated in dollars and euros and managed by corporations. . . .

What Libra backers are calling “decentralisation” is in truth a shift of power from developing world central banks toward multinational corporations and the US Federal Reserve and the European Central Bank.

Power will shift to the Fed and ECB because the dollar and the euro will squeeze out weaker currencies in developing countries. As seen recently in Greece, the result will be to cause their governments to lose control of their currencies and their economies.

Pros and Cons

In a June 9 review in Forbes, Caitlin Long, co-founder of the Wyoming Blockchain Coalition, agreed that Libra was a Trojan horse but predicted that it would have some beneficial effects. For one, she thought it would impose discipline on the US banking system by leading to populist calls to repeal their corporate subsidies. The Fed is now paying its member banks 2.35% in risk-free interest on their excess reserves, which this year is projected to total $36 billion of corporate welfare to US banks – about half the sum spent on the US food stamp program. If Facebook parks its entire US dollar balance at the Federal Reserve through one of its bank partners, it could earn the same rate. But Long predicted that Facebook would have to pay interest to Libra users to avoid a chorus of critics, who would loudly publicize how much money Facebook and its partners were pocketing from the interest on the money users traded for their Libra currency.

But that was before the Libra white paper came out. It reveals that the profits will indeed be divvied among Facebook’s Libra partners rather than shared with users. At one time, we earned interest on our deposits in government-insured banks. With Libra, we will get no interest on our money, which will be entrusted to uninsured crypto exchanges, which are coming under increasing regulatory pressure due to lack of transparency and operational irregularities.

UK economics professor Alistair Milne points to another problem with the Libra cryptocurrency: unlike Bitcoin, it will be a “stablecoin,” whose value will be tied to a basket of fiat currencies and short-term government securities. That means it will need the backing of real money to maintain its fixed price. If reserves do not cover withdrawals, who will be responsible for compensating Libra holders? Ideally, Milne writes, reserves would be held with the central bank; but central banks will be reluctant to support a private currency.

Caitlin Long also predicts that Facebook’s cryptocurrency will be a huge honeypot of data for government officials, since every transaction will be traceable. But other reviewers see this as Libra’s most fatal flaw. Facebook has been called Big Brother, the ultimate government surveillance tool. Conspiracy theorists link it to the CIA and the US Department of Defense. Facebook has already demonstrated that it is an untrustworthy manager of personal data. How then can we trust it with our money?

Why Use a Cryptocurrency at All?

A June 20th CoinDesk article asks why Facebook has chosen to use a cryptocurrency rather than following WeChat and AliPay in doing a global payments network in the traditional way. The article quotes Yan Meng, vice president of the Chinese Software Developer Network, who says Facebook’s fragmented user base across the world leaves it with no better choice than to borrow ideas from blockchain and cryptocurrency.

“Facebook just can’t do a global payments network via traditional methods, which require applying for a license and preparing foreign exchange reserves with local banking, one market after another,” said Meng. “The advantage of WeChat and AliPay is they have already gained a significant number of users from just one giant economy that accounts for 20 percent of the world’s population.” They have no need to establish their own digital currencies, which they still regard as too risky.

Meng suspects that Facebook’s long-term ambition is to become a stateless central bank that uses Libra as a base currency. He wrote in a June 16 article, “With sufficient incentives, nodes of Facebook’s Libra network would represent Facebook to push for utility in various countries for its 2.7 billion users in business, investment, trade and financial services,” which “would help complete a full digital economy empire.”

The question is whether regulators will allow that sort of competition with the central banking system. Immediately after Facebook released its Libra cryptocurrency plan, financial regulators in Europe voiced concerns over the potential danger of Facebook running a “shadow bank.” Maxine Waters, who heads the Financial Services Committee for the US House of Representatives, asked Facebook to halt its development of Libra until hearings could be held. She said:

This is like starting a bank without having to go through any steps to do it. . . . We can’t allow Facebook to go to Switzerland and begin to compete with the dollar without having any regulatory regime that’s dealing with them. 

A Stateless Private Central Bank or a Publicly Accountable One?

Facebook may be competing with more than the dollar. Jennifer Grygiel, Assistant Professor of Communications at Syracuse University, writes:

. . . [It] seems that the company is not seeking to compete with Bitcoin or other cryptocurrencies. Rather, Facebook is looking to replace the existing global financial system with an all-new setup, with Libra at its center.

At least at the moment, the Libra is being designed as a form of electronic money linked to many national currencies. That has raised fears that Libra might someday be recognized as a sovereign currency, with Facebook acting as a “shadow bank” that could compete with the central banks of countries around the world.

Caitlin Long thinks Bitcoin rather than Libra will come out the winner in all this; but Bitcoin’s blockchain model is too slow, expensive and energy-intensive to replace fiat currency as a medium of exchange on a national scale. As Josh Constine writes on Techcrunch.com:

[E]xisting cryptocurrencies like Bitcoin and Ethereum weren’t properly engineered to scale to be a medium of exchange. Their unanchored price was susceptible to huge and unpredictable swings, making it tough for merchants to accept as payment. And cryptocurrencies miss out on much of their potential beyond speculation unless there are enough places that will take them instead of dollars . . . . But with Facebook’s relationship with 7 million advertisers and 90 million small businesses plus its user experience prowess, it was well-poised to tackle this juggernaut of a problem.

For Libra to scale as a national medium of exchange, its governance had to be centralized rather than “distributed.” But Libra’s governing body is not the sort of global controller we want. Jennifer Grygiel writes:

Facebook CEO Mark Zuckerberg . . . is declaring that he wants Facebook to become a virtual nation, populated by users, powered by a self-contained economy, and headed by a CEO – Zuckerberg himself – who is not even accountable to his shareholders. . . .

In many ways the company that Mark Zuckerberg is building is beginning to look more like a Roman Empire, now with its own central bank and currency, than a corporation. The only problem is that this new nation-like platform is a controlled company and is run more like a dictatorship than a sovereign country with democratically elected leaders.

A currency intended for trade on a national—let alone international—scale needs to be not only centralized but democratized, responding to the will of the people and their elected leaders. Rather than bypassing the existing central banking structure as Facebook plans to do, several groups of economists are proposing a more egalitarian solution: nationalizing and democratizing the central bank by opening its deposit window to everyone. As explored in my latest book, “Banking on the People: Democratizing Money in the Digital Age,” these proposals could allow us all to get 2.35% on our deposits, while eliminating bank runs and banking crises, since the central bank cannot run out of funds. Profits from the public medium of exchange need to return to the public, rather than enriching an unaccountable, corporate-controlled Facebook Trojan horse.

• This article was first posted under a different title on Truthdig.org.

America’s Descent Into Despotism: Finding Our Source of Power Within

The United States is in a major upheaval. Trump’s cabinet shake-up moves the country into an alarming direction. From the nomination of torturer Gina Haspel as the head of the Central Intelligence Agency to Mike Pompeo, former CIA Director and a vocal opponent of the nuclear deal with Iran as new secretary of state, his selection exposes the White House’s dangerous kill instincts.

An ultimatum came with the president’s appointment of John Bolton, the former American ambassador to the United Nations as his 3rd national security advisor. Bolton, who served in the George W. Bush administration is notorious for his hawkishness, with a great zeal for military action against Iran and North Korea. This rearranging of the deck chairs in the sinking empire signals the great calamity of foreign policy ahead with potential threats of war.

In this seeming free-fall toward despotism, what can ordinary people do? Tackling corruption of our political system and averting a doomed future requires us to truly understand the problems we are facing. The crisis of representation didn’t just arise with Trump, the new commander in chief. A glimpse of it was shown during the 2008 financial meltdown, which was covered up swiftly by bank bailouts and politics of ‘hope and change’. The truth is that seeds for dystopia have been inside this country all along. The roots of the issues that are now emerging in Trump’s America go back to the very beginning of this nation.

In its modern formation, the United States inspired the world with its torch of liberty and equality. At the same time, this beacon of light had its darkness within. From the onset, America contained internal contradictions manifested as the founder’s hypocrisy and the violation of its own ideals with genocide of natives, slavery of blacks and suppression of women. The Founding Fathers of the United States brought a victory of rejecting the power of the King’s monarchy and pioneered a path for one’s own self-determination. The concept of “a government of laws, not of men” was groundbreaking at that time. Yet without reconciling its own shadow, this nation of law failed to fully shield the republic from the tyranny of the Old World.

Supremacy of reason

The unredeemed darkness found in America’s troubled past was a force inside Western civilization that tries to define history, subjugating other perspectives to its single vision. Europe, with its ethos of separation and objectivity set out to conquer the world, spreading its influence across many continents. This domineering power of reason found its new front of exploration in the New World.

America, driven by the monotheistic goal of Manifest Destiny, expanded its territory with brutality. It swallowed what is edible, assimilating immigrants one by one to its conception of what is civil, while spitting out those that it considered impalatable, relegating them into three-fifths of a person or exterminating them from the earth altogether as savages.

This maddened head centricity was manifested in the structure of a new government. Sheldon Wolin, author of Democracy Inc noted how the framers of the Constitution created a so-called managed democracy, a system that favored elite rule and that “the American political system was not born a democracy, but born with a bias against democracy” (2008, p. 228).

The intellectual elites regarded the democratic majority rule as an irrational force and they feared the tyranny of popular majorities. While the faculty of reason positioned itself as a supreme force, a potential to account its autocratic power was found inside America.

The sovereign power of We the People

Expressed in the preamble of the Constitution “We the People” was faith in the wisdom of ordinary people to govern themselves. This was an intention to shift from the model of government that acts as authority of their lives to one that places power in the hands of ordinary people. In this government established under the rule of the people, the source of legitimacy was not derived from a god or king, but was meant to come from people themselves.

This arrangement of governance was not granted from above. It was first demanded by those who opposed the ratification of the 1787 Constitution that lacked the guarantee of individual liberties. The proponents of the Bill of Rights articulated essential parts of the sovereign power of We the People as a freedom of expression; freedom of speech, religion, assembly and the right to petition the government for a redress of grievances. By building upon First Amendment rights, further efforts emerged from below. From abolitionists’ defiance and the women’s suffrage movement to civil rights and free speech movements, people’s determination for individual autonomy persisted.

Assault on this power of ordinary people intensified with the rise of corporate power in the ‘60s. Manifest Destiny is now carried out with Nike’s slogan of “just do it”. With limited liability and having no human beings in charge, the abstraction of the head inside transnational corporations took flight from the communal ground, plundering their way into the globe, without ever having to take responsibility for the consequences of their actions. Giant corporations became a sponsor for this managed democracy, gaining control over media to manipulate public perception, keeping American voters in hostage with the lesser of the two evils charade politics.

WikiLeaks, the rise of cryptographic direct action

In the political winter of the post-911 war on terror, as fear and apathy spread around the globe, a new civic force surfaced online. The waves of whistleblowers began shedding light on the collaborative secrecy of elites that deceive and manipulate the public behind a façade of democracy.

WikiLeaks, with its motto of “privacy for the weak and transparency for the powerful”, opened a floodgate of a free flow of information. This world’s first global Fourth Estate embodies the philosophy of cypherpunks– a loosely tied group of online privacy advocates who saw the potential of cryptography to shift the balance of power between individuals and the state. With the idea that cryptography is the “ultimate form of non-violent direct action” (2012, p. 5), WikiLeaks founder and editor in chief Julian Assange built the system of scientific journalism that would give everyday people around the world tools to combat military might and confront the madness of fallen reason that censors free speech.

The invention of the anonymous drop box was truly revolutionary. It enabled anyone to send information securely without a trace of his or her identity. Through the robust decentralized infrastructure built around this game changing technology, WikiLeaks was able to provide unprecedented source protection in the history of journalism. Here, the organization that derived its source of inspiration in American founding ideas, freed the First Amendment that had been captured through a corporate monopoly and co-optation of the media, making it available to people all around the world.

It is through WikiLeaks’ adamant commitment to the principle of free press that former U.S. Army intelligence analyst and whistleblower Chelsea Manning was able to exercise uncompromising free speech and engage in the American tradition of civil disobedience. Manning, whom the late attorney and President Emeritus of the Center for Constitutional Rights, Michael Ratner described as the “conscience of our nation”, let the American public see the US imperialism in action in the Middle East.

In her request for a presidential pardon, Manning stated her commitment to the ideal of America, saying how she was willing to pay the price if it would make this country be “truly conceived in liberty and dedicated to the proposition that all women and men are created equal.” Through her non-violent cryptographic direct action, she helped America find its conscience.

One individual’s act of courage brought another. Inspired by Manning, Edward Snowden came forward to inform people about the NSA’s mass surveillance. In one of the addresses he made, Snowden also described his act as a public service and connected it with Dr. King’s non-violent civil disobedience. Through his whistleblowing, the former NSA contractor defended individual privacy as fundamental civil rights for all people and tried to preserve the world where people can share creativity, love and friendship freely without every conversation and interaction being monitored and recorded.

Whistleblowers and their faith in ordinary people

From WikiLeaks disruptions to Snowden revelations, courageous act of truth-tellers renewed the faith in the wisdom of ordinary people to govern themselves. Both Manning and Snowden believed in the public’s right to know and held a view that when people are informed, they can make changes and determine their own destiny.

Faith is different than mere belief. It is not about one blindly trusting or passively accepting something. Faith is an active will that requires one to choose out of themselves to believe in something. When established media and trusted institutions failed, Manning chose to put her trust in the journalistic organization that was little known at that time. When the government’s internal mechanisms of accountability were broken, combined with the betrayal of Obama’s campaign promises and his war on whistleblowers, Snowden turned to American journalists whom he could trust by his own judgment of the integrity of their work. They placed faith not in political leaders or authority but in fellow men and women.

It is to this faith in the ability for the wise and knowledgeable public to govern themselves that fearless journalism responded. WikiLeaks, the publisher of last resort, kept its promise to the source by publishing full archives with maximum political impact and bringing information back to the historical record. By doing so, it has become an enemy of the most powerful government in the world, being subjected to legal and extra-legal pressure. Through honoring Snowden’s wishes, journalists Glenn Greenwald, Laura Poitras and Barton Gellman broke the story of NSA surveillance and led the Guardian’s independent journalism, making the established media fulfill its duty. In the aftermath of Snowden’s disclosures, when this young whistleblower was stranded in Hong Kong, WikiLeaks demonstrated its extraordinary source protection with journalist Sarah Harrison risking her own liberty to help Snowden attain asylum.

With this faith given by peers, citizens around the world who have been distrusted by their own governments and made powerless began to claim their own power. By recognizing that someone believed in them and sacrificed their lives so that they can be free, they were able to believe in their own ability to protect those they love and preserve rights that they cherish. The will to respond to this faith in one another made it possible for ordinary people to carry out extraordinary acts.

Bitcoin, Innovation without Permission

Contagious courage lit by people’s faith created a fellowship that can withstand the state violence. It began to shift the balance of power, replacing the source of legitimacy from trusted institutions to ordinary people’s trust in one another. As the network of resistance grew, new attacks emerged. Following the release of U.S. diplomatic cables in 2010, WikiLeaks faced the unlawful financial blockade imposed by Bank of America, VISA, MasterCard, PayPal and Western Union. When this economic sanction starved the whistleblowing site, destroying 95% of their revenue, the flow of autonomy that helped the organization circumvent economic censorship came from fellow cypherpunks.

Bitcoin, as a peer-to-peer electronic cash was the holy grail of cypherpunks. With its defining feature of censorship resistance and permissionlessness, Bitcoin makes free speech an app that can be distributed across borders and used by anyone regardless of nationality, religion, race, gender or economic status. Here, imagination from computer science redeemed the reason that lost its connection to the heart, by synthesizing bits of isolated knowledge that had created separation and injustice, transforming them into a higher order of unification.

Networks of equal peers emerging around this invention opened up a new avenue of dissent in a form of decentralization. Adam Back, notable cryptographer whose work was cited in the Bitcoin white paper, described cypherpunks as “a state of mind” and explained its philosophy of “writing code” as a “proactive approach to societal change by doing: building and deploying tech – rather than by lobbying politicians or asking permission.”

This path toward decentralization was first taken by the creator of this technology. The anonymity of Satoshi Nakamoto represents the power of ordinary people. Through an act of publishing the white paper under a pseudonymous name and making the protocol open source, the mysterious author gave up ownership and simultaneously gave users control of the software, making it possible for each individual to use it as a tool to govern themselves.

What is enshrined in a piece of mathematics is wisdom of ordinary people that understands that man is corruptible, as well as perfectible and recognizes the security holes inherent in the existing model of governance that requires trust in third parties. It is the wisdom of history that teaches us how the best way to secure the system is not to have levers of control in the first place through which power concentrates, leading to despotism. With a consensus algorithm placed as a foundation, laws can be built that is more immune to man’s fallen nature. With this, idea of a government of laws, not of men can be truly realized. Governance of We the People now becomes possible, where rules of law are validated by consensus of ordinary people as opposed to elected officials having power over them.

Andreas Antonopoulos, a technologist and one of the respected figures in Bitcoin, in his talk titled “Courage to Innovate”, captured new enthusiasm and passion ignited around this technology in a phrase “innovation without permission” and connected it with civil disobedience. He reminded the audience how “almost every important innovation in history starts out being illegal or unregulated” and interesting technology started out with people who forgot to ask permission. Describing technology’s core invention as a platform to scale trust, Antonopoulos described how this is a system that makes it possible for people to make social decisions without hierarchy, whether it is government bureaucracy, corporations or any other institution. This system Antonopoulos characterized as “rules without rulers” is being built by people around the world without central coordination.

Claiming our revolutionary spirit

Our Founding Fathers, no matter how imperfect they were, brought us ideas conceived in a revolutionary spirit. The genius of the Constitution is that it makes fundamental laws and principles of government amendable. The highest law of the land preserved space for people to not accept authority imposed on them and even to revolt against it when it is necessary, by giving ordinary people means to change rules. America indeed was founded on rebelliousness and distrust of their own government, demonstrated in the Declaration that reads “whenever any Form of Government becomes destructive… it is the Right of the People to alter or to abolish it, and institute a new Government…”

The government brought by our forebears not only allowed dissent, but depended on our rebellion. The realization of the Constitution as the fulfillment of ideals in the Declaration required individuals with a strong and independent mind. It demanded people to develop moral courage to defend these ideals against special interests of single groups or nations and any adversarial forces that try to deny them.

From the civil rights movement to whistleblowers at the frontier of digital liberation, we have seen the awakening of revolutionary spirit in people’s courageous civic action upholding the ideals of this country. The networks from below expands, converging together to build a new global civil society. Bitcoin developers around the world put their knowledge and skills together, making improvement proposals and fixing bugs, striving to meet the demands of all users.

Innovation without permission is enlivening entrepreneurship. Instead of waiting for problems to be solved by politicians or corporate CEOs, working class began to have faith in their ability to make changes, finding strength and resources within themselves. Around this currency, a new economy is now being bootstrapped, with startups and new businesses hiring people and providing them with skills and knowledge, while many other industries are stagnating.

Solutions to the crisis of representation are within us. Ordinary people, through freely associating with one another, can now give birth to the rule of a real democracy, securing Life, Liberty and the pursuit of Happiness for all.

Bitcoin, Innovation of Money and Reinventing Activism

Bitcoin’s price explosion made news headlines this last year. Topics of digital assets entered onto dinner tables and friendly chats at work places. Fever of the digital gold rush that has swept mainstream finance became contagious. Institutional funds are now entering into cryptos, seemingly hedging their bets with their “sugar high” bubble economy. Jamie Dimon, the JPMorgan CEO who previously slammed Bitcoin as a fraud is said to be regretting his claim. He now praises the blockchain, the underlying technology of Bitcoin. Goldman Sachs recently acknowledged Bitcoin as money, comparable to gold. The firm is already setting up a trading desk for digital currencies.

While Bitcoin is gaining traction in financial circles, Naval Ravikant, the CEO and co-founder of Angel List saw this technology’s profound socio-political impact. He noted, “Bitcoin is a tool for freeing humanity from oligarchs and tyrants, dressed up as a get-rich-quick scheme.” WikiLeaks founder Julian Assange also recognized the revolutionary power of this money based on math. At the end of 2017, from the Ecuadorian embassy in London where he has been confined more than five years, Assange tweeted, “Bitcoin is a real Occupy Wall Street”.

What is this disruptive force of Bitcoin? The Occupy movement that had spread over dozens of US cities and across many countries created a wave of uprising. It inspired a new vision of politics outside of the electoral arena. Now, years after Occupy’s demise, this new innovation of decentralized digital currency could offer a way to reinvent activism, helping all around the world to organize and create radical social change.

The era of creditocracy

First, let’s look back at the rise of OccupyWallStreet protest. The movement kicked off in New York’s financial district in 2011, uniting people from all walks of life under the banner of the 99% against economic inequality and corporate greed. Occupy emerged within a cultural milieu of transparency, spearheaded by WikiLeaks’ disclosure of documents pertaining to government secrecy and corruption.

The insurgency in lower Manhattan marked a peak of disillusionment about the current state of democracy. People began to wake up to an invisible hand of the market – 1% global oligarchy, that was controlling resources through money based on debt. In the article “Student Debt Slavery: Bankrolling Financiers on the Backs of the Young”, attorney and author Ellen Brown described the advantage of “slavery by debt” over owned slavery, which was an idea argued in a document reportedly circulated during the American Civil War among British and American banking sectors. Brown showed that while slaves need to be housed and fed, “free men could be kept enslaved by debt, by paying wages insufficient to meet their costs of living”.

This debt-based financial system has become what professor and veteran of the Occupy movement Andrew Ross calls a “creditocracy”. In this, ordinary people with student loans, medical and credit card bills have become indentured servants. Ross explains how it is the Western version of a “debt trap”, where debts are piled up with monthly credit card balances or underwater mortgages that cannot be ever paid to ensure continuing revenue for the banks. He notes how this is similar to the developing countries that fell under IMF dependency in the course of the 1970s and 1980s.

In the era of creditocracy, ubiquitous anonymous corporations keep the force of control invisible, making people obey their rules. MasterCard tells their customers who the master is with exuberant charge-back fees and penalties. VISA maintains US hegemony of the world, denying access to finance for refugees and immigrants and assisting US government sanctions on countries like Russia and Iran that challenge dollar supremacy. This is a two-tiered financial patronage network that exempts fees and extends credit lines to the rich and privileged, while it exploits the poor by seizing their funds and engaging in predatory lending.

Creditocracy now expands around the globe and threatens civil liberties. Recently, PayPal came under scrutiny, with their failure to provide services in the West Bank and Gaza, while making its service available in Israel. This payment processing company was accused by pro-Palestinian activists as enacting “online apartheid” against Palestinians.

Vision of new democracy

It is people’s indignation against this systemic economic oppression that sparked revolt at the center of world finance seven years ago. Occupy was unprecedented in its scale and its unique style of no central coordination or formal leadership. It was a move away from electoral politics and top-down decision making to the principle of consensus and direct action, which activist scholar David Graeber described as “the defiant insistence on acting as if one is already free”.

During the early days of this movement, the mainstream media criticized demonstrators for not having a clear mandate. Yet this lack of demand was a strength and refusal to recognize the legitimacy of power structures that protesters were challenging. What unfolded then was a new form of activism that truly channels uncompromising power of ordinary people. It was an activism that doesn’t acknowledge external power or seek for permission. Instead it encourages people to change society by simply building new alternatives.

This was a seed for a real democracy that is horizontal and participatory. It was manifested through activists’ effort of creating people’s libraries, media hubs and kitchens and forming a new way of governance through mic check and General Assemblies. This vision of organizing society through mutual aid and voluntary association went viral, spreading with internet memes and Twitter hashtags, creating solidarity across borders.

Cypherpunks write code

Occupy’s permissionlessness, without a need to refer to central authority, is embodied at the core of Bitcoin. The idea of Bitcoin was introduced in a whitepaper published in the midst of the 2008 financial crisis. It is clear that the anonymous creator of Bitcoin was concerned about deep corruption of government and their mishandling of monetary policies. This was shown in the message embedded in the genesis block of the block-chain. It contained a headline of a newspaper that read “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.

Richard Gendal Brown, chief technology officer at software firm R3, provides a summary of the invention of this open source software:

Bitcoin is the world’s first system of digital cash, which allows peer-to-peer value transfer over the internet with no reliance on third parties. It is built on a new invention, the decentralized global asset register. This global asset register is the world’s first decentralized consensus system.

What is behind the protocol of a truly peer-to-peer currency is a revolutionary mind that refuses to obey the command from above and declares independence from all that claim authority. This fierce autonomy is the moral value of cypherpunks, a group that emerged in the late 1980s, who saw a potential of cryptography as a tool to shift balance of power between the individual and the state.

Cryptographer and one of the notable cypherpunks Adam Back, who was cited in Bitcoin’s whitepaper for his invention of Hashcash described the ethos of cypherpunks as that of writing code. This is an idea of making changes by creating alternatives. Back noted how pressuring politicians and promoting issues through the press tends to be slow and create an uphill battle. He pointed out how instead of engaging in the political process through campaigns and appealing to authority for changes, people can simply “deploy technology and help people do what they consider to be their legal right”. Then society would later adjust itself to reflect these values.

Network of resistance

While the mainstream media is obsessed with Bitcoin’s price and investors speculating gains in their portfolios, this technology’s defining feature lies in censorship resistance. The integrity of Bitcoin relies on decentralization, which is a method to attain security by flattening the network and removing levers of control, rather than performing checks and balances of power that tends to concentrate through control points inherent within the system, seen in the existing model of governance. This unprecedented security creates a network of resistance resilient to any forces of control.

When governments that are meant to defend civil rights act against their own people, Bitcoin preserves the network value of public right to free association and speech and distributes this to all users. This right was claimed and exercised in real time. In facing the illegal financial blockades imposed by Bank of America, VISA, MasterCard, PayPal and Western Union, WikiLeaks showed ordinary people how they can circumvent and combat economic censorship with Bitcoin.

As the whistleblowing site continues to publish CIA Vault publications, political persecution intensifies. Now the Freedom of the Press Foundation, an organization that was founded to tackle attacks on free press, decided to terminate processing of donations for WikiLeaks. In response to this new political pressure, Assange urged supporters to continue making contributions with cryptocurrencies and unleash the power of free speech that belongs to all.

As trusted institutions and governments are failing, people around the world are finding their own path of self-determination. In Argentina, as the Peso has been steadily falling since the country’s 2002 economic collapse, Bitcoin adoption has been accelerating. Bitcoin historian and former tech banker who goes by Tweeter handle @_Kevin_Pham noted, “Bitcoin’s killer app can be found in Venezuela, it’s called: ‘not dying.’” As hyperinflation is rendering their national currency worthless, Venezuelans are flocking to Bitcoin as a safe haven to store their savings.

In Iran, the government came on full force, engaging in internet censorship and cracking down on protesters who revolted in response to the country’s long economic stagnation. It was reported that leading up to the civil unrest, the Bitcoin community has grown with more people entering into cryptocurrencies. In Afghanistan, a company that advocates Afghan women’s computer literacy empowered women with bitcoin, helping them gain financial sovereignty.

Permissionless activism

The Occupy movement ignited aspirations for the rule of the common people, verified and upheld by a network consensus created through people’s trust in one another. Yet the enthusiasm for real democracy that was mobilized through social media could not withstand state coordinated police crackdowns. With the eviction of encampments and squares, people’s power that had arisen then dissipated.

Now, with Bitcoin surging, a new stream of disruption is emerging. These old financial engineers aim to protect their dying fraudulent world of central banks by upending their speculative casino with this hyped crypto market. As incumbent banks geared with regulatory arms try to control the bubbling civic power, perhaps this technology calls people to rise once again to halt financial aristocracy by innovating the ‘activism without permission’ – this time with better security and robustness.

Knowledge of computer science empowered by the ethics of cypherpunks now provides a viable platform for people to occupy society with their heart’s imagining. Sovereign individuals can now defy the rule of creditors and create their own rules, ending financial apartheid and discrimination. They can coalesce to fund independent media they support with their money and defund wars that they oppose. Permissionless activism can bring a jubilee, making rapacious debt obsolete through each individual simply walking away from this erroneous system, uniting with those who share goals to create a new economy.

The imagination of this invention opened the potential for a radically different future. From Rosa Parks’ refusal to give up her seat on the bus in Montgomery Alabama to occupiers’ adamant refusal to make demands, Bitcoin’s networked consensus creates an autonomous currency that allows all to move struggles of the past forward.

The rise of Bitcoin is poised to disrupt the world of creditocracy, as we know it. As the price rally continues, many now proclaim the rise and rise of Bitcoin! The question that remains is: Can our imagination rise with the revolutionary force this technology brings? Bitcoin already unleashed a potent power within. The future is now in our hands. It is up to each person to claim this power and show the world what democracy really looks like.

 

Runaway Train Towards Full Digitization of Money and Labor

The other day I was in a shopping mall looking for an ATM to get some cash. There was no ATM. A week ago, there was still a branch office of a local bank – no more, gone. A Starbucks will replace the space left empty by the bank. I asked around – there will be no more cash automats in this mall – and this pattern is repeated over and over throughout Switzerland and throughout western Europe. Cash machines gradually but ever so faster disappear, not only from shopping malls, also from street corners. Will Switzerland become the first country fully running on digital money?

This new cashless money model is progressively but brutally introduced to the Swiss and Europeans at large as they are not told what’s really happening behind the scene. If anything, the populace is being told that paying will become much easier. You just swipe your card – and bingo. No more signatures, no more looking for cash machines. Your bank account is directly charged for whatever small or large amount you are spending. And naturally and gradually a ‘small fee’ will be introduced by the banks. And you are powerless, as a cash alternative will have been wiped out.

The upwards limit of how much you may charge onto your bank account is mainly set by yourself, as long as it doesn’t exceed the banks’ tolerance. But the banks’ tolerance is generous. If you exceed your credit, the balance on your account quietly slides into the red and at the end of the month you pay a hefty interest; or interest on unpaid interest and so on. And that even though interbank interest rates are at a historic low. The Swiss Central Bank’s interest to banks, for example, is even negative; one of the few central banks in the world with negative interest, others include Japan and Denmark.

When I talked recently to the manager of a Geneva bank, he said, it’s getting much worse. ‘We are already closing all bank tellers, and so are most of the other banks’. Which means staff layoffs which, of course, makes it only selectively to the news. Bank employees and managers must pass an exam with the Swiss banking commission, for which they must study hundreds of extra hours within a few months to pass a test usually planned for weekends, so as not to infringe on the banks’ business hours. You got two chances to pass. If you fail you are out, joining the ranks of the unemployed. The trend is similar throughout Europe. The manager didn’t reveal the topic and reason behind the ‘retraining’, but it became obvious from the ensuing conversation that it had to do with the ‘cashless overtake’ of people by the banks. These are my words, but he, an insider, was as concerned as I, if not more.

Surveillance is everywhere. Now, not only our phone calls and e-mails are spied on, but our bank accounts are too. And what’s worse, with a cashless economy, our accounts are vulnerable to be invaded and robbed by the state, by thieves, by the police, by the tax authority, by any kind of authority, and, of course, by the very banks that have had your trust for all your life. Remember the ‘bail-in’, the infamous “hair-cut”, first tested in early 2013 in Cyprus? Bail-ins will become common practice for any bank that has abused its greed for profit and would go belly-up, if there wouldn’t be all those deposits from customers. Even shareholders are not safe. This has been quietly decided some two years ago, both in the US and also by the non-elected white-collar mafia, the European Commission, EC.

The point is, ‘banks über alles’ (“banks above everything”, following Hitler-Nazis’ battle cry “Deutschland Über Alles”). And which country would be better suited to introduce ‘cashless living’ than Switzerland, the epicenter – along with Wall Street – of international Zion-banking. Banks will call the shots in the future, on your personal economy and that of the state. They are globalized, following the same principles of deregulation worldwide. They are in collusion with globalized corporations. They will decide whether you eat or become enslaved. They are one of the tree major weapons of the 0.1 % to beat the 99.9% into submission. The other two at the service of the master hegemon’s Full Spectrum Dominance drive, are the war- and security industry and the ever more brazen propaganda lie-machine. Banking deregulation has become another little-propagated rule of the World Trade Organization (WTO). Countries who want to join WTO, must deregulate their banking sector, prying it open for the globalized money-sharks, the Zion-controlled banking conglomerates.

Retrenchment of personnel in the banking employment market is increasing. The news only selectively reports on it, when there are large amounts of jobs being eliminated. Statistics lie everywhere, in the EU as well as in Washington. Why scare people? They will be scared enough, when they are offered jobs at salaries on which they can barely survive. That’s happening already. It used to be a tactic applied for developing countries: Keep them enslaved by debt and low pay, so they don’t have time and energy to take to the streets to protest.  They have to look for food and work, whatever menial jobs they can get, to feed their families. It’s now hitting Europe, the West in general. Some countries way more than Switzerland.

Cashless trials are going on elsewhere, especially in Nordic countries, where selected department stores and supermarkets do no longer take cash. Another monstrous trial has been carried out in India a year ago, in the last quarter of 2016, where from one day to another 80% of the most popular money bills were eliminated, and could only be exchanged for new bills by banks and through bank accounts. And this in an almost pure cash country, where half the population has no bank account, and where remote rural areas have no banks. People were lied to so that the sudden introduction had maximum effect.

It caused massive famine and thousands of people died, as they had suddenly no acceptable cash to buy food – all instigated by the USAID Project ‘Catalyst’, in connivance with the Indian rulers and central bank. It was a trial. It was a disaster. If it works in India with 1.3 billion people, two thirds of whom live in rural areas and most of them have no bank account, the scam could be applied in any developing country. See also India – India, Death by Demonetization: “Financial Genocide”, The Crime of The Century.

What is going on in Switzerland is a trial with the high end of populations. How is the upper crust taking to such radical changes in our daily monetary routine?  So far not many protests have been noticed. There is a weak referendum being launched by a group of people who want the Swiss Central Bank be the only institution that can make money, like in the ‘olden days’. Though a very respectable idea, the referendum has no chance in today’s banking and debt-finance environment, where youth is being indoctrinated with the idea that swiping your card in front of an electronic eye is cool. Today, most money is debt-money, made by private banks, like elsewhere in Europe and the US. Worldwide banking deregulation, initiated by the Clinton Administration in the 1990s – today a rule for any member of the World Trade Organization (WTO) – has made this all possible.

Digitization and robotization is just beginning. Staffed check-out counters in supermarkets are disappearing; most of them are converted into automatic check-outs – and that happened within the last year. Where are the employees gone?  I asked an attendant who helped the customers through the self-checkout. ‘They joined the ranks of unemployed’, she said with a sad face, having lost several of her colleagues. ‘It will hit me too, as soon as they don’t need me anymore to show the customers on how to auto-pay.’

Bitcoins

Digitization also includes the cryptocurrencies, the blockchain moneys floating around – of which the most famous one is Bitcoin. It brings digitization of money to an apex. The system is complex and seems to lend itself only to ‘experts’. Cryptocurrencies are fiat money, based on nothing, not even on gold. Cryptos are electronic, invisible and highly, but highly, speculative, an invitation for gangsters and fraudsters. It looks as if cryptocurrencies were designed for crooks and speculators.

Bitcoin was allegedly invented by Satoshi Nakamoto which could be a pseudonym of a man or a group of people, suspected to live in the US. “Nakamoto’s” identity is believed to be commonwealth origin, due to the vocabulary used in his writings. One of his close associates is purportedly a Swiss coder, who is also an active member of the cryptocurrency community. He is said to have graphed the time stamp of each of Nakamoto’s more than 500 bitcoin forum posts. Such ‘forum posts’ exist in the thousands, worldwide. They form an elaborate network based on algorithms.

Bitcoin was formally created in January 2009 with a fix amount of 21 million ‘coins’, of which more than half are already in circulation, or ‘mined’ as the jargon goes, and 1 million, or about 4.75% (of the total) can be traced to Nakamoto. This, based on the current market value, corresponds to close to US$15 billion. Today’s overall Bitcoin market cap is more than US$ 315 billion. The market is highly volatile. Drastic daily fluctuations are common, especially within the last 12 months. If one of the major Bitcoin holders, like Nakamoto, would capitalize his profit by selling a big portion of his holdings, the Bitcoin price would be in free fall, functioning pretty similar to the regular stock exchange.

On 24 August 2010, when Bitcoin was first traded, its value was US$ 0.06. On 26 December 2017, the coin was worth US$ 15,770, an increase of more than 250,000%. In the last twelve months, its value increased from about US$ 800 in December 2016 to a peak of close to US$ 20,000 in mid-December 2017, an increase of nearly 2,500 %. However, in the last 7 days, after several ups and downs, the price has dropped by about US$ 680; i.e., by more about 4%, and the trend is uncertain. Perhaps a sign of quick profit-taking? This all shows how instable this cryptocurrency is, apparently much more so than trading corporate shares on the stock market. And certainly not apt as a every-day currency base.

The number of cryptocurrencies available over the internet as of 27 November 2017 is above 1300 and growing. A new cryptocurrency can be created at any time and by anybody. By market capitalization, Bitcoin is presently the largest blockchain network (database network, storing data in different publicly verifiable places), followed by Ethereum, Bitcoin Cash, Ripple and Litecoin.

Bitcoin may be the next bubble, bringing down a parallel economy which has already its fingers clawing into our regular western economy. Cryptocurrencies are officially forbidden in Russia and China, though stopping cryptocurrency dealings by individuals is hardly possible. They do not touch the traditional banking system. That’s why major banks hate them. They circumvent the banking suckers, prevent them from making ever higher profits from horrendous commissions, against which the people at large are powerless.

Here is Bitcoin’s positive side. It escapes bank and state controls. If countries’ economies were run on Bitcoins or another cryptocurrency, they would escape US sanctions which function only because western currencies are foster-children of the US-dollar, hence, subject to the dollar hegemony; meaning all international transactions have to pass through a US bank. A typical case is ‘banking blockades’, when Washington decides to stop all international transactions of a country until it submits to the wishes of the empire. It is blackmail; totally illegal, but unless there is a monetary alternative, the (western) world is subject to this system.

Argentina is a case in point. Buenos Aires was forced by a New York judge in June 2014 to pay a New York based Vulture Fund US$1.6 billion, an illegal ruling according to a UN Resolution. Argentina refused to pay, so the judge, interfering in a sovereign nation, blocked more than US$500 million of Argentina’s debt payment to creditors, bringing the country to the brink of a second bankruptcy in 13 years. Eventually, neoliberal Macri negotiated a deal with the Vultures and made a payment in excess of US$ 400 million.

This US blackmail would not have been possible had Argentina been able to make its foreign transactions in Bitcoins or another cryptocurrency. Venezuela has created the “petro”, a hydrocarbon and gold based national cryptocurrency to escape dollar-caused inflation and for some of its foreign transactions, thereby also escaping the sanctions stranglehold of Washington. Had Greek and Cyprus citizens had a cryptocurrency alternative to the euro, they would not have been subject to the cash control imposed by the European Central Bank.

On the other hand, funding of terror organizations, like ISIS, cannot be disrupted, if the terror group deals in cryptocurrencies.  This shows, for good or for bad, Bitcoins, or cryptocurrencies are for now unique in resisting censure and blackmail, or any kind of authoritarian outside interference in electronic money transactions.

Cashless Living

If Switzerland accepts the change to digital money, a country where until relatively recently most people went to pay their monthly bills in cash to the nearest post office, then we, in the western world, are on a fast track to total enslavement by the financial institutions. It goes, of course, hand-in-hand with the rest of systematic and ever faster advancing oppression and robotization of the 99.9% by the 0.1%.

We are currently at cross-roads, where we still can either decide to follow the discourse of a new electronic monetary era, with ever less to say by “We, the People” about the product of our work, our money; or whether, We, the People, will resist a banking/finance system that has full control over our financial resources, and which can literally starve us into submission or death, if we don’t behave. In order to resist we need an alternative monetary system or monetary network, away from the dollar-euro hegemony, and cryptocurrencies, as structured today, are no alternative.

All the more important is the ascent of another economy, another payment and transfer scheme which already exists in the East, the Chinese International Paymen System (CIPS), effectively a replacement of SWIFT, totally privately run and linked to the US-dollar and US banks. The world needs a multipolar currency system, based on the real economic output of a country or society, as is the case in China and Russia, not one based on fiat money as is the current western economy.

Will Switzerland, the stronghold of world finance, along with New York, London and Hong Kong, resist the temptation of increased profit, power and control, offered by digital money? We, the People, have still the chance to decide either for continuing rotting in a fraud economy, based on wars and greed for which digital money, exacerbated by cryptocurrencies, is a new tool for a new maximizing profit bonanza on the back of the common people; or do we opt for an honest future and for a life that leaves us free to take sovereign political and monetary decisions in a full cash society. For the latter we must wake up to see the propaganda fraud going on before our eyes, and to resist the robot and electronic money onslaught being unleashed on us.

From Gandhi to Catalans, the Revolutionary Movement of Peacemakers

As Trump’s dangerous move on Iran’s nuclear deal and his provocative reaction to North Korea undercut diplomacy, tension is rising for World War III. Discord in the international community has been amplified in conflicts of identity politics across America. Greed and power-seeking leaders’ ambition for profits never end. With ever-increased military budgets, combined with tax cuts for the rich and slashes in health care and public funds, the legacy of imperialism is carried on. Uncertainty created by economic stagnation is generating frustration and anxiety, which is turned into anger and fear. These emotions are then channeled to harness a false sense of nationalism and white supremacy.

In the air of hostility that surrounds us, it is tempting for people to shun those who have opposing views and to respond to hate with even more hate. Resistance can easily be relegated to reactionary rallies. Protests quickly turn into an ideological battle of us versus them, which often results in violence. Yet for real social change to happen, it is imperative for all of us to overcome this loathing toward different views and work together.

There is a force within each person that can counter the hatred that seeks to separate us. Mahatma Gandhi recognized this as the power of peace and applied it to create nonviolent civil disobedience that led to India’s independence from British rule. Now, more than a half century later, a similar peaceful resistance has emerged.

Recently, leading up to the independence referendum on October 1 in Catalonia, Spain’s richest province, Spanish police engaged full force to stop the voting. WikiLeaks founder and editor in chief Julian Assange, who has remained confined to the Ecuadorian embassy in London for more than five years, acknowledged the peaceful act of self-determination by the Catalonian people in facing this police violence. Calling it “the most disciplined Gandhian project since Gandhi,” he said that “its results will spread everywhere.” Peace is a revolutionary force that largely remains untapped. How can social movements be created by this innate transformative power and bring harmony to this divided world?

The great law of peace

The same force of peace that guided Gandhi to fight against the oppression of Britain was present at the beginning of the United States. In history classes, many learned about the American Revolution and the War of Independence, where founders bravely fought for separation from King George. We all know America was founded on revolutionary spirit, but little is known about the quiet strength behind a fiery passion of war at the birth of a nation.

Early colonists, after settling into this New World, interacted with indigenous people. Historians have consistently noted how the original framers of the US Constitution like George Washington and Benjamin Franklin greatly admired the core concepts of the Six Nations of the Iroquois Confederacy and their democratic governance that was based on a vision of peace. So what does peace mean?

From Leo Tolstoy’s War and Peace to John Lennon’s popular song Give Peace a Chance, the word “peace” is in our everyday vocabulary. Many of us make slogans, carry banners of peace, and march in the streets. In our culture, peace seems to have become a mere symbol and has come to simply indicate the opposite of violence or a lack of conflict. Native Americans had a different conception of peace. Philosopher Jacob Needleman1 described how to them, it is “not as something passive, not as a mere absence of conflict, but as a force that can harmonize the actions and impulses of human life in all their multiplicity and opposition to each other” (p. 215). Peace, to Native Americans, is at the center of their way of life.

Needleman recognized how this peace diverges from European religious and ethical principles that work in duality and supports the “radical separation of the good (however it is understood) and the evil (that which resists the good)” (p. 198). He noted how peace conceived by Native Americans acknowledges interconnectedness of good and evil and it “includes all the forces of life,” even “what we often call ‘evil’” (p. 195). He then described for them “to be at peace means to be at peace with one’s conscience” (p. 196).

The First Nation’s conception of peace calls on each to recognize and respect each other’s differences, even the opinions and viewpoints of those we disagree with or condemn. The Great Law of Peace protects independence and individual liberty, while at the same time bases decision-making processes on consensus rather than majority rule. This wisdom of peace was not only at the root of Native American governance, but also influenced the formation of the US government—in particular, the key concept of decentralized power that was secured by the separation of power and checks and balances incorporated into the US Constitution.

Lost ideals and call for love

This peace placed at the foundation of America is a radical acceptance of differences that recognizes all equally in their uniqueness. Out of this fertile soil that embraces diverse seeds sprang the sprouts of inalienable rights. These include life, liberty, and the pursuit of happiness that were promised in the Declaration of Independence.

Yet this revolutionary idea of peace that enlightened the mind and lit the hearts of early settlers seems to have been cast off by the shadow of the old world of monarchy. As Frederick Douglass reminded us in his famous speech “The Meaning of July Fourth for the Negro,” America became “false to the past, false to the present, and solemnly binds herself to be false to the future.” From the onset, with internal contradictions in the genocide of natives, slavery of Blacks, and the oppression of women, the nation diverged from the ground upon which it stood. The promise of equality in the Declaration became empty words. History, with absence of authors who can take responsibility for their creative power, remained asleep to its potential and fell prey to the darkness within.

As the republic expanded, with a focus on material happiness and short-term pleasure through acquisition, the force of peace retreated into the background. Yet it continued to speak to the hearts of ordinary people who still listened to the cries in the wilderness, awakening impulses for social change.

In the 1840s, women’s suffrage gained strength. Through the emergence of feminism, nature began to speak its silent language of peace. Some recognized the influence of the Iroquois principles of democracy, in which women played an important role. In the mid-1950s, mass protests erupted against racial segregation and discrimination in the southern states, which launched the nationwide civil rights movement. Martin Luther King Jr. found the power of peace that Gandhi had discovered. In his effort to liberate Black people in the struggle for civil rights, he inspired the nation through a true message of peace—its unifying force of love even for one’s enemies. In his speech delivered in 1957 in Montgomery, Alabama, Dr. King said:

Somewhere, somebody must have some sense. Men must see that force begets force, hate begets hate, toughness begets toughness. And it is all a descending spiral, ultimately ending in destruction for all and everybody. Somebody must have sense enough and morality enough to cut off the chain of hate and the chain of evil in the universe. And you do that by love.

Such is the decentralized power of peace. It inspires all to yield the urge for power in order to open a space for others to come forward, a principle necessary for democratic dialogue.

Rage against the machine

The ’60s brought the further destruction of the democratizing force of peace and at the same time created a resurgence of peacemakers. As the country engaged in military action overseas, the opposition to US involvement in the Vietnam War quickly organized anti-war protests. Jimi Hendrix’s rendition of “The Star-Spangled Banner” in 1969 at Woodstock struck a chord in the hearts of many, letting people hear “the rockets’ red glare, the bombs bursting in air” over Vietnam.

As the nation began seeking for answers blowing in the wind, a massive student movement kicked off at UC Berkeley. In the launch of the free speech movement (FSM), Joan Baez, who led the first group of protesters into Sproul Hall on the UC Berkeley campus, echoed Gandhi’s principles of nonviolence. She reminded the crowd of the commitment to act with love in the heart and that students were going to be “nonviolent in thought, word, and deed”.2

The clash of two forces became visible in images of flowers placed in gun barrels. As the youth turned to the hardened America represented by armed police, for a moment a breath of peace was brought back to resuscitate this dying culture. Yet this power of peace upheld by childlike innocence alone was not enough to confront the growing beast of the military industrial complex, which with its insatiable hunger consumes all into its soulless capitalism. As Mario Savio, the spokesperson for the FSM depicted in his passionate speech in December 1964, the “operation of the machine becomes so odious.”

As the rise of corporate power rolled back most progress that consumer advocate groups had made, the rage against this machine was quietly building up. Decades later, a call for an uprising came from southern Mexico, one of the poorest parts of the world, where indigenous people were treated like animals and abandoned by Western neoliberal economic policies. On January 1, 1994, the day the North American Free Trade Agreement (NAFTA) went into effect, the people in Chiapas revolted against the Mexican government. This ignited the revolutionary power of peace on the streets of Seattle in 1999. The protest against the World Trade Organization (WTO) spawned a cycle of global social justice movements. Yet this victory was short-lived and the enthusiasm for a different world was crushed by the Bush era’s “war on terror” and a draconian crackdown of dissent, creating a chilling effect and moved society toward a more authoritarian state.

The age of cypherpunk

In the moral ice age of the post-911 world, a new front of courage emerged from the internet. In April 2010, with the release of the “Collateral Murder” video, an unknown website burst onto the global stage. When the government’s internal mechanism of checks and balance had been broken, WikiLeaks opened an avenue for a new accountability. Through this whistleblowing platform, patriotic and liberty-loving men and women found a way to restore the peace of a nation by each choosing to be at peace with their conscience.

Empowered by the vision of cypherpunks, a group that advocates social change with the use of strong cryptography, WikiLeaks engaged in nonviolent information warfare, freeing speech that is censored and oppressed. With its radical acceptance of speech in all forms, backed by innovative technology, WikiLeaks made the First Amendment available to the whole world.

From the election in Kenya and the Icelandic revolution to the Arab Spring and Occupy movements, WikiLeaks’ publications sparked contagious courage, helping open a future where ordinary people armed with knowledge began claiming the power of peace that was for so long stripped away and denied. History that was awakened through this courage is still moving.

Now in Catalonia, as Assange observed, significant events were happening that would change the “relationship between population and state in Western Europe since the fall of the Berlin Wall.” As the Spanish government seized election literature, shut down websites, and threatened politicians as well as the offices of newspapers, the Catalan president gave his people instructions on how to circumvent this blockade and obstruction of free speech. Assange then noted: “When #Catalonia‘s press is Tweeting how to use proxies to avoid voting censorship we are in the age of cypherpunk.” He then provided technical support for people in Catalonia to communicate and organize securely, as they faced Spanish oppression for their right to vote for the referendum.

Currency of radical acceptance

The unchecked power of the dominant elite continues, engaging in the suppression of free speech through economic censorship. Along with control of public media and police, the Spanish government has been trying to seize control of Catalonia’s finances. Assange, who had firsthand experience of this kind of financial warfare with private companies’ illegal banking blockade of WikiLeaks, called people’s attention to the network of resistance that has been steadily growing online.

The invention of Bitcoin was the holy grail of cypherpunks. With features of permissionless, censorship resistant, and unseizable transactions, it was envisioned to become stateless currency that preserves the individual liberty of all. The white paper of this revolutionary decentralized money was published in 2008. It became operational in 2009.

The Iroquois’ law of peace codified in the wampum belt is now being coded into software. It becomes an armory that is made much more secure and immutable to any foreign or domestic attacks. Here, the First Nation’s vision of great peace that inspired its democratic confederation seems to have found its realization in the open source protocol of the consensus algorithm. Security expert and author Andreas M. Antonopoulos calls Bitcoin’s governance model “leaderless”—that which creates decentralized power. He describes how the system motivates people to come to consensus at a very high level and decisions are made by the circle of five constituents: miners, developers, wallets, merchants, and users.

As the era of cypherpunk opened up, the tyranny of the incumbent legacy system gathered up its power to define a new digital age on its own terms. Western liberal democracy, with the arms of technology and transnational corporations, has now expanded throughout the world, placing all into an elaborate web of a financial industrial complex. In this artificial machination of the world, money that has been used as a weapon to wage war and exploit can be automated, with humans no longer in charge. With mass surveillance and control, it can create a total dystopia. Here, the Great Law of Peace enshrined in a piece of mathematics can offer a shield for ordinary people to defend themselves against the sword of power that seeks to control and enslave all living beings into institutional hierarchies.

With Bitcoin, the First Amendment becomes an app that can be distributed across borders indiscriminately to anyone, including those condemned as enemies. Stewarded by developers around the world committed to the shared ideals of cypherpunk, Bitcoin makes its transactions from country to country, from belief to belief, from opinion to opinion, and traverses the way of peace. Having demonstrated its unbreakable integrity for the last eight years, the protocol of radical acceptance continues to evolve, providing an alternative to tyranny without fighting, by each engaging in the creative act of innovation.

As governments all over the world become destructive and old systems begin to crumble, new networks are being made by linking the knowledge of computer science with the wisdom of the First Nations, who have lived in harmony with nature. Now, the West and natives, two minds from the same roots that once diverged paths can come together to begin a new civilization. By each choosing freely to chart the way of peacemaking, social movements can be created. People walking side by side bring this world toward a more perfect union, founded upon a principle of equality that allows everyone to be free.

  1. Needleman, J. (2002). American soul: Rediscovering the wisdom of the founders. New York, NY: Penguin Group.
  2. Nagler, M. N. The search for a nonviolent future: A promise of peace for ourselves, our families, and our world. Maui, HI: Inner Ocean, 2004, p. 202.

The Currency Paradox

How Do You Tackle a Big Idea?

It has long been believed that Capitalism is the last economic system. It has triumphed over its rivals, socialism and communism, and has now come to define modern society. Many believe that the religion of Adam Smith was the culmination of all of our economic experiments. To many, not only is Capitalism the best economic system that humanity has ever devised, it is the best that it will ever devise.

About five years ago, I decided to challenge that premise. An idea had occurred to me which ultimately germinated into a system. For two years, I let the idea gestate, examined it from every angle which I could conceive. Finally, in 2014, I was able to bring the concept to fruition. In May, 2014, I published an 14,500-word essay titled The Currency Paradox, a work of economic philosophy. But, more significantly, it presented a concept of incredible audacity…

An economic system that could viably replace Capitalism.

I published it thinking it had the potential to open up a new way of thinking about economics, that it might spur new approaches that would lead to improved economic equality. I shared it with economists of all stripes and political leanings, hoping to create a dialogue. I was interested to know what they thought about my essay and, more importantly, if and how it might influence their thinking on economic matters.

However, a strange thing happened: silence.

Though many read the essay, the small bit of criticism I received was entirely ideological. No one assailed its basic premise and the viability of the economic system presented in it went completely unchallenged. Though I knew better, it was as if my essay didn’t exist. Despite making repeated attempts, the Econ community refused to engage. Economists have refused to tackle the ideas presented in The Currency Paradox.

Some may think that it was probably because the ideas in The Currency Paradox were unworthy of debate. Maybe, but I doubt that absolutely no economist over a three-year period would not have taken the opportunity to “educate” a layman on the error of his concept. Economists are known for many things but humility isn’t one of them. However, more saliently, the concepts presented in The Currency Paradox, once only recognized and examined marginally, have gone mainstream: globalization, economic inequality, student debt, the value of work… all of these topics, which now occupy the mindshare of the Econ community, were addressed in my essay. Solutions like Universal Basic Income (UBI) and Universal Job Guarantee (UJG) have become far more popular topics of debate though the economic innovation in The Currency Paradox elegantly encompasses and surpasses both. The Econ community has become more aware of the pathologies in the Capitalist system but have refused to even examine a possible cure.

In every sense of the word, The Currency Paradox has proven to be “anti-fragile”; it is an idea that has only grown stronger as time has passed. Indeed, much of it has been confirmed through independent research; for instance, my observations regarding the changes in global economic inequality were independently substantiated by economist Branko Milanovich with his now-famous “Elephant Chart.” You’ll now get a chance to decide for yourself. The following is my essay, with only mild edits relative to the original. As with my original essay, we’ll start with my initial thoughts on Bitcoin; keep in mind that this was written in 2014, when the trajectory of it was still very much in doubt. My thinking on the technology hasn’t changed; rather, it has been confirmed. Though I’ve been proven correct regarding its viability as a common money, some people still consider it “the future.” I still think it is a way-station on the road to a better idea.

On Bitcoin

There’s been a lot of press recently about Bitcoin. What exactly is it? The simple answer is that it is a virtual currency. However, what makes it unique is that it is also an astounding innovation in computer protocols, akin to HTTP, SMTP, and other core Internet technologies. The Bitcoin protocol eliminates the need for a trusted third party when performing electronic payment transfers. Rather than entrusting (and paying) a third party to handle a payment transaction between two parties, Bitcoin allows two parties to transmit money, in the form of bitcoin, to each other near instantaneously and at very little costs.

What is exciting about Bitcoin is its speed, security, and low costs associated with payment. Its infrastructure maintains a perfect record of all transactions and has proven to be impervious to any malicious electronic attack. Proponents are excited by its potential to financially empower billions of people without access to banking resources or for whom money transfer is expensive.

While a tremendous achievement in a technological sense, Bitcoin is highly unlikely to be effective as a currency. For the most part, the important qualities of a currency are efficiency, elasticity, and its ability to store value. How does Bitcoin measure up?

For practical purposes, consider “efficiency” to mean the ease with which money is used for payment or transferred. Is Bitcoin solving a problem related to the efficiency of modern money? Not really. Granted, transferring Bitcoin is extremely fast, inexpensive, and secure, but it lacks the comprehensive infrastructure of today’s fiat money. Literally trillions of dollars are transferred between parties for payment and foreign exchange using the current system, which is mostly electronic and largely frictionless. In this respect, Bitcoin and other so-called “crypto-currencies” aren’t solving a problem. As it relates to efficiency, the fiat money system as it exists is “good enough.”

In regards to “elasticity,” fiat currencies are very flexible relative to the needs of the market; the money supply can be expanded or contracted as needed by governments or central banks. “Elastic money” allows a central authority to address excessive inflation, deflation, recession, or other distortions in a Capitalist economy [or at least try to]. Is Bitcoin more “elastic” than today’s fiat currencies? Absolutely not.

Indeed, Bitcoin suffers from many of the same problems that make gold impractical for modern use as money. Similar to gold, Bitcoin is “mined,” but through the use of algorithms; as more are created, the computational resources required to mine them increases. The net effect is that relatively few bitcoin are produced. This condition causes Bitcoin to more closely resemble commodity money, mirroring the same deficiencies. The fact that the total supply of Bitcoin is always a known absolute quantity and that new ones are slow and resource-intensive to produce encourages price volatility that actually greatly exceeds gold.

However, the most damning aspect of Bitcoin is the fact that only 21 million units will ever be produced; whatever beneficial qualities they have will paradoxically encourage them to be hoarded, artificially limiting supply. Right now, over 60% of bitcoin have never been transferred or exchanged. As the absolute limit of its supply is reached, Bitcoin transactions could potentially slow to a crawl. Demand could exceed supply so greatly that it will become obsolete; losing whatever perceived value it has as a common money as people flee to a less scarce, more flexible currency.

Some make the argument that Bitcoin is infinitely divisible, making the elasticity issue moot. However, the likelihood is that dividing bitcoin will create the problem of “infinite denominations,” producing a substantial amount of complexity in matters of accounting. Also, dividing a currency does not truly address circumstances in which actual expansion of the money supply is necessary. It is the equivalent of stating that a bucket of water can be stretched by using an eye-dropper for distribution rather than a cup. No amount of rationing from one bucket of water will solve the problem of needing another bucket of water.

Finally, currency should be a relatively good “store of value.” In other words, a particular currency should be generally accepted as having a certain level of worth in current circumstances and a relatively high chance of having a certain level of worth in future circumstances. Not only is this criteria very difficult to meet with today’s fiat currency but it is a difficult standard to practically meet with any currency. However, the “store of value” problem is circumvented in a pretty interesting way with fiat currency… its value is more or less imposed by force. Governments make the determination of what the common money will be and then use force, implied or actual, to ensure the money’s stability. This creates an interesting correlation between a country’s money and the power of its armed resources relative to its population. It’s likely not a coincidence that the world’s most powerful country militarily also has the dominant money. The bottom line is that the government of the United States of America has the legal apparatus and force of arms to ensure and reinforce the acceptance of the dollar as legal tender for resolving debt among its citizens. More importantly, U.S. dollars are the only form of money accepted by the U.S. government for taxation. The act of taxation provides strong validation for fiat currencies and ensures their value; this concept is historically referred to as “chartalism.”

Is Bitcoin an effective “store of value”? It is a largely unregulated, pseudo-commodity created completely electronically, controlled and validated by no central authority. Its value is determined entirely by the market. So it is worth something as long as people think it is worth something. The main problem with Bitcoin is that it has no real-world analog with which to reference. They have no intrinsic value of which to speak and not even the benefit of force of arms with which to impose their value. They are created from thin air and the very equipment used to create them can only be purchased with government-backed fiat currency. There is nothing to indicate that Bitcoin is an effective store of value.

Some claim that Bitcoin’s intrinsic value lays in the protocol that enables it. This is reasonable thinking if there were no possible substitutes and Bitcoin had evolved as the sole means of making payments or transferring money electronically. However, the global currency market can and likely will continue to evolve without the Bitcoin protocol. An object, system, or protocol must not only be essential but also unable to be practically substituted or duplicated for it to be credibly claimed to have high “intrinsic” value. For instance, what effective substitute can there be for indoor plumbing? Bitcoin does not meet that criteria. The global currency system already processes trillions of dollars in payments and exchanges and will likely continue to do so indefinitely without it.

Whatever its technological merits, Bitcoin fails utterly to meet the basic criteria of a currency. It is possible that other crypto-currencies will solve the problems of efficiency and elasticity, but it is highly unlikely that any crypto-currency will solve the problem of being an effective store of value. While the technology underlying crypto-currencies will surely make an indelible mark on the overall technological landscape, it is doubtful that Bitcoin or its copycats/derivatives will succeed in the long-term as currencies.

The Paradox of Fiat Currency

There are a lot of fancy definitions for money, but I prefer to think of it as the “blood” of an economy. Much like blood transports oxygen and nutrients to the cells in a human body, money flows in an economy to transport goods and services from the people who provide them to the people who need them.

However, fiat currencies themselves are only placeholders for real goods and services. Without the backing of central authorities, they have no real value. Fiat currencies are a paradox, being inherently worthless yet able to be traded for things of actual worth. This is a fundamental flaw in the Capitalist system. Let’s examine this in detail:

Does money have an exact or even near exact correlation to the amount of goods and services available at any given moment? Those who believe in the efficiency of markets will generally say “yes,” but it is highly unlikely. To illustrate: one person may be willing to pay $100 for a cow, one may be willing to pay $1,000 for it, however, does the cow itself alter in any way if someone pays more for it? Does the same cow become a better cow if someone pays more for it or a worse one if someone pays less for it?

The belief is that “markets” are self-correcting; that, in the end, fair value for that cow is established as an aggregate of what the market is willing to pay for it. But, under any conditions, market pricing is highly arbitrary. It is actually an aggregate of what many people with many different levels of understanding and/or need related to price and value are willing to pay. In many circumstances, people may pay radically different amounts for the same item or service. On top of that, items can be (and often are) priced by their supplier (businesses) to appeal only to a limited segment of the population, placing it beyond the financial means of a majority of people who may actually desire that particular item or service. Luxury items are notable examples. Quality is often stratified by means; higher quality items are reserved for those who can afford them. In this manner, quality of life itself is stratified. In the situation of the cow, it is unlikely that the person who can only pay $100 dollars for the cow has similar financial circumstances relative to the person who can pay $1,000 for it. Also, it doesn’t matter how many cows are offered for sale, the person who can only offer $100 will likely always lose to the person who can offer $1,000 for the cow. Targeted pricing by suppliers and variations in the knowledge and the means of the population creates pricing distortions in which items and services that may be very similar intrinsically have radically different values as measured in money.

A more significant problem exists when it comes to financial and speculative markets, such as commodities. To illustrate: soccer is a universal game and millions around the world play it … but what are the odds that a group of moderately-skilled players will be able to defeat a team of professionals?The pros are separated from the moderately-skilled players by a number of factors such as talent, ambition, long hours of practice, and a love or understanding of the game that gives them insights that less-skilled players do not possess. The professional soccer player has an advantage over the moderately-skilled player that is substantial in the short-term and practically insurmountable over the long-term. It is possible that some of the moderately-skilled players could achieve a high level of proficiency at the game with intense practice, but the actuality of that is highly unlikely. The reality is that, among the millions of people who play and enjoy soccer, only a relative handful has the unique combination necessary to become truly elite players. Those players will always have an advantage against lesser-skilled opposition.

The same can be said of financial markets as well. There is a relatively small group of “professional Capitalists” with the particular combinations of talent, experience, insider knowledge and circumstances to have distinct advantages over others who participate in those markets. These circumstances create distortions that are similar to professional soccer players playing against lesser players. Rather than both teams winning an equal amount of times over the long-term as statistics would generally dictate in situations with 50/50 odds, the professional team will defeat the team of lesser players the overwhelming majority of the time. Many markets are likewise skewed, with the people possessing expert skills and/or insider knowledge having an indelible advantage over those who do not.

These conditions make economics as a discipline an inexact practice. As a result of naturally occurring distortions in market dynamics, it is practically impossible to know the value of money in an economy – as an accurate measure of goods, services, and productivity – at any given time. The reason for that is because market economics guarantees that nothing can ever have an absolute, permanently-fixed value defined in money. Indeed, there are substantial advantages for professional Capitalists that such conditions exist.

This brings us to the matter of money supply.  In theory, central banks or governments can create an unlimited amount of it. Fiat currency is an artificially-created commodity which, by the very fact that it can be produced practically without limit with relatively little effort, is worthless. Yet, every unit of fiat currency can be exchanged for real goods and services. In other words, something that is inherently worthless can be exchanged for things of actual worth. Central authorities get around this by letting markets determine what currency is worth in any given circumstance but, as shown, this is a symbolic exercise. Does believing that money is worth something actually make it so? Also, what actual choice do markets really have? Fiat currencies are standards codified by laws which are then protected with implied or actual force. It is impossible to live in a modern society without having to use fiat currency, especially considering its use for taxation purposes. As a result, people who control the production and lending of money wield an incredible amount of power and have a ridiculously unfair advantage over those who do not.

From a syllogistic standpoint, the following conclusion can be drawn: without a way to precisely correlate fiat currency to actual goods and services, the fiat currency system is very similar to theft. As previously stated, fiat currency is inherently worthless, yet can be exchanged for actual goods and services the moment it is created. Those responsible for producing and lending it benefit from legal monopolies that are protected by force. On top of that, even in an economic environment in which markets set its value, the constant production of fiat currency slowly erodes its purchasing power to zero. This in itself would not be as much of an issue if the decrease in money’s purchasing power was offset by relative increases in the amount of money people earned as a result of providing their services in the form of work. However, that is not the case. Globalization and technological advancements have deprecated the overall value of work by shifting labor costs from more expensive, highly-developed labor markets to less-expensive, developing labor markets. In other words, the earned incomes of workers in highly-developed regions are stagnant or falling as a result of their being displaced by technology as well as workers in developing regions, whose incomes are commensurately rising. The net effect is the leveling of most incomes across all regions to a common lower baseline. The improvement in the standard of living for some is coming at the expense of the standard of living for others.

This can be seen in the growing glut of labor supply in highly-developed regions taking the forms of high unemployment and underemployment. Because people, for the most part, cannot opt-out of the fiat currency system, the bargaining power of most workers is severely compromised. As the overwhelming bulk of necessary work doesn’t require advanced skills, there is always a ready pool of people willing to take the lowest level of compensation offered in order to survive. Efforts to destroy, severely hamper, or suppress collective bargaining in many developed regions has also greatly contributed to stagnant or falling earned income. The net effect is a system in which workers must compete individually against not only each other, but also a massive network of corporations and institutions that control the overwhelming bulk of the planet’s wealth and resources through the fiat currency system.

This condition could be offset if people could retreat to an alternative economic system outside of the fiat currency system. But such a system does not exist in a practical manner. There is not a practical alternative economic system in the world ready to claim the billions of people currently being economically exploited or neglected by the current system.

Massive unemployment and underemployment, widespread poverty, and escalating income inequality are the clearest evidence that the fiat currency system is a sophisticated form of theft; by correlating real work to an inherently worthless commodity and then deprecating the purchasing power of that commodity over time, the fiat currency system isn’t just an extremely efficient system of theft of goods and property, but one for theft of something far, far more important … time.

The Debt-Driven Economy

In order to get into the heart of the current economic system, it’s best to start with a simple question: why does the fiat currency system exist?

Some conspiracy theorists think that its purpose is global enslavement, that a cabal of the super-wealthy and powerful has created it to control the world. If there is indeed a conspiracy controlling the financial system, then:

1) it has beaten all odds by keeping such a thing relatively secret for presumably decades to hundreds of years;

2) Even still, the odds are very much against such a group maintaining this type of secrecy indefinitely;

3) Even if everything goes more or less exactly as this cabal plans, something completely unexpected will occur that will tip the apple cart. A perfect crime may indeed be possible, but not an ongoing one that lasts hundreds of years.

A simpler explanation is that the fiat currency system exists because it is practical and, for the most part, it has worked. It has been exceedingly effective as a mechanism for the advancement of the human species.

The fiat currency system is complex in its intricacies, but simple conceptually. It is actually similar to a game of “hot potato.” Basically, when money is created, it is immediately loaned to a person or entity with the expectation that the borrower will pay it back with interest. In many instances, the money initially borrowed is loaned out again at a higher interest rate to another party. The initial loan can change hands several times or not very much at all but, ultimately, a borrower without the means or inclination to pass the debt must invest time and effort to produce the goods or services that can be exchanged for the money to repay the debt. In this manner, value is actually created. It can be stated that this is the engine on which civilization runs.

However, there are signs that the system has reached the limit of its utility. The likelihood is that debt has exceeded the total capacity for human production so much that it can no longer drive real growth; debt has simply accumulated far beyond the practical ability for it to be repaid with productive effort.

To illustrate:

Since fiat currency is created by central banks in massive quantities, it can be loaned very cheaply; this is normally accomplished when they buy assets or securities from governments or large financial institutions, often ones native to the region in which the currency is produced. In some instances, such as China, the government itself acts as the central bank. When central banks or governments purchase securities from large banks, the funds are added to the institutions’ reserves and then used as the basis for what is known as “fractional-reserve banking,” a practice in which the bank is able to lend a greater amount than what it retains in actual monetary reserves. Critics of the fractional-reserve model claim that it creates money “out of thin air” and they are, for the most part, correct. However, the problem isn’t necessarily the money created through fractional-reserve banking, but the debt obligations created by the demand for interest on the money that is loaned.

To account for potential defaults and to make profit, banks charge interest on their loans, the rates of which are generally inversely related to the amounts loaned. In other words, money is cheap to borrow in large quantities and becomes progressively more expensive to borrow as the loan amounts decrease. This condition is mostly circumstantial; banks lend money based on the assessment of risk for default. Institutions and individuals that already control massive amounts of capital are seen as better risks when lending large sums of money. The less capital that is controlled by an individual or institution, the more it is perceived as a risk for default relative to the amount to be loaned. Even those with an excellent repayment history will be limited to how much they can borrow simply based on their capital levels. The greater the perceived risk for default, the higher the amount of interest that is charged for a loan. This creates the paradoxical situation in which the entities with the least amount of resources to repay loans have greater debt obligations in relation to those resources when they borrow money.

The likelihood is that debt creation has outpaced the practical ability for it to be repaid with work. Estimates place total world debt at roughly $224 trillion USD; split evenly among the roughly 7.13 billion people on the planet, that places the estimated debt burden of everyone at about $31,417 USD. A considerable figure, but maybe not as intimidating as some would think. However, consider the following:

Using the average world salary in Purchasing Power Parity (PPP) dollars of about $18,000 annual (the equivalent in USD), it would take every individual about two years to pay off their share of the debt. However, this can only be done if nobody pays for anything else, such as food, water, shelter, or clothing. If you assume that everyone will have a relatively generous 15% left over as disposable income after paying for necessities, this leaves about $2,700 per year per person to address the debt issue. Based on that number, it would take over eleven years for each person pay off their share of the debt. For many, that still may not seem like a particularly excessive burden until you take these other factors into account:

That debt burden is for everyone: man, woman, and child, from newborns to those only seconds away from death, not exclusively working-age adults. Labor force Participation in the U.S. is roughly a third of the population; applying that proportion worldwide, the debt load for each working-age person is $94,118 USD. It would take a bit over five years for each person to pay off their share of the debt provided they paid no other expenses. Using the disposable income figure of $2,700 per year, it would take each person about thirty-five years to pay off their share of the debt.

Over two billion of the 7.13 billion people on the planet live on less than $2 PPP per day. Multiplying their daily income ($2) by the number of U.S. standard business days in a year (260) yields an annual income figure of $520. At that annual income, it would take over sixty years for the members in this group of two billion to pay off their $31,417 share of the debt while not paying any other expenses. At 15% disposable income, it would take each of them over four hundred (400) years to settle their portion of the debt.

However, this assumes a complete workforce of 7.13 billion people. If we confine the debt to a labor force participation rate of roughly 1/3 the size of the total population, it would take about one hundred eighty (180) years for each person in this group to pay off their share of the debt provided they pay for nothing else. At 15% disposable income, it would take each of them over twelve hundred (1,200) years to pay off their share of the debt.

These figures assume a static debt. However, the debt is actually growing at a rapid pace. Almost every new unit of fiat currency created carries a debt burden (there are exceptions, U.S. minted coins being a notable one). Debt creation is not standing still.

However, things aren’t all bad … global wealth is estimated to be about $241 trillion. Operating under the premise that one dollar of wealth destroys one dollar of debt, subtracting total global debt from total global wealth leaves the world with $17 trillion net wealth. Not too bad, right? But …

Using the current distribution of wealth, the top 1% of the population will control 46% of what’s left while the top 10% will control 85%. Of the $17 trillion left, the top 1% will control about $7.82 trillion or about $109,677 per “1 Percenter.” The next 9% would control about $6.6 trillion or about $10,285 per person, rounding out the top 10%. This leaves $2.55 trillion dollars for the remaining 90% of the world, a little over 6.4 billion people. That equals about $397 per person or slightly over $1 per day over the course of a year.

While this is definitely a simplification of the debt situation, it should provide a pretty accurate sense of its scale. It takes real effort in the form of man-hours to pay off debt and the scale of the debt created by the fiat currency system is staggering. The debt situation facilitates tremendous financial inequality, as those with the knowledge, skills and connections starve the fiat currency system of money by accumulating it in huge quantities through profit and capital gains and using it to control massive amounts of natural resources.

The net effect is that fiat currency has likely outlived its usefulness as a practical means for managing an economy. In other words, the fiat currency system has simply become too expensive. For instance, even with massive advancements in technology, debt and inflation have made funding large- to massive-scale efforts such as actually returning to the moon or sending a manned mission to Mars economically unfeasible. Some may think that such efforts are unimportant, but, as I will explain later, the very survival of the human species relies on our ability to fund projects of those magnitudes.

Next:  Part 2