Economic History · Federal Government · investing · Personal Finance

What Happens To Bitcoin Post-Dollar?

This is more of a thought piece than anything else, though I’m sure it will rile up a lot of Bitcoin HODLs and “technical analysts.” Much as I own (not enough) of the shiny algorithm coin,  the entire way we go about perceiving future currency seems rather warped. It’s a question requiring a bit beyond the typical wide-eyed enthusiasm of liberty advocates and the general freedom rabble.

For a long time, the theory of Bitcoin promoters has been that its limited cap of 21 million units serves as a safe store of value versus the highly-inflated dollar, which shows no signs of stopping its brrr-a-thon. Coin baggers predict that their currency will continue to rise as governments spend and borrow, perhaps at some point replacing the classical concept of “fiat” or paper money. Folks who have bought or continue to purchase before Bitcoin’s rise to a dominant financial position will be rich, while others are left with largely worthless investments.

But there’s one problem of sorts. These Bitcoin pumpers are basing their wealth and success on its exchange rate with the U.S. Dollar. In other words, to be a Bitcoin “millionaire,” you must assess its value in accordance with the same fiat currency that is supposedly unstable. Selling out of Bitcoin to realize some of this wealth means holding large amounts of an inflationary currency which continues to rise along with the president’s signature on spending bills.

Now, a skeptic could argue he will buy gold with his Bitcoin, but this is highly inconvenient for global transfer and transactions where the price point is less than a full ounce of yellow metal. Furthermore, gold itself is giddily valued in line with the dollar, despite the fact that its supporters believe fiat to be unstable and inflationary. A goldbug I knew even tried to diminish the validity of S&P 500 returns by claiming they were based in dollars instead of gold, despite arguing for gold on the basis of dollars.

This brings us to an important query: what happens if the dollar actually collapses, or ceases to exist? Does gold continue to “store” value? Is Bitcoin still worth a lot of money relatively, or does it adopt a dominant position attune to the dollar, albeit with less inflationary tendencies? And what happens to the people who failed to purchase crypto when it was cheaper in dollar terms? Are they doomed to scraping out an existence with whichever fiat currencies remain, or trying to collect a monthly check of 0.00000000001 BTC to afford the good consumerist lifestyle?

No one can really know. The future might be crypto, but that scenario could end up being unpleasant, depending on who possesses a bigger account.   

Culturalism · Economic History · investing · Personal Finance

What Value Money Really Has

One of the most annoying aspects of reading historical texts involves being exposed to concepts which are simultaneously exciting and depressing, on the latter point because you realize the information will likely never have widespread acknowledgement. Such truths remain distant and untouched, at best exposed on occasion by the lone examiner to his motley crew, who may not actually be interested. But still he must do so, because otherwise the wisdom will be lost to a larger portion of the population.

I admit to feeling this way following my run through several political works by Feder. Although somewhat dogmatic at times, he manages to break down the question of currency and usury in a manner which countless lolbertarians and Marxists fail to do, despite their public acceptability. What’s more, the discourse doesn’t demand an excessively unmerciful slog through the miseries of Das Kapital, or any “free market” equivalent.

At the heart of Feder’s advocacy is the notion that debt-financed capitalism (which he calls Mammonism) creates slaves out of people and destroys nations. Folks are tethered to their debtors and spend long swaths of life attempting to serve the objectives of the banker class, in many cases falling into utter destitution during the process. Even traditional socialism is blamed for this, insofar as Marxists make deals with private corporations to issue interest-paying loans for state projects.  Thus the outcome remains subservience and poverty on the leftist front as well.

In contrast, Feder demands the eradication of all interest on loans, replacing such private measures with offerings by the State, with only the principle to be repaid. The implications of such policy are substantial, even in the context of our modern age. If the government cannot borrow on interest, it seems probably that our debt would be much lower, as U.S. interest on liabilities alone was $404 billion last year. Furthermore, interest-free loans by the government would have certainly softened the 2008 crisis, when many people lost their homes due to the machinations of the Adjustable Rate Mortgage.

On money itself, he describes paper currency as essentially a voucher representing – but not holding within – the value of what labor has been performed. So in effect a person who pays for their car to be washed is actually purchasing the value innate in the service, which can then be exchanged by the washer for other goods or services. The result is more of a barter system than the “money is money” arguments we see strewn across popular discourse. From here we get to the nationalist concept of a currency being backed by labor or productivity, as opposed to gold or merely the printing press.

Towards the end of his tract, Feder endorses a wealth tax, and makes an interesting argument about inheritances. He dismisses the concerns of those who might not be able to pass on wealth by suggesting what they should care about is raising their children well enough to live successfully in the world. Taken in the context of the “Affluenza ” case some years back, his logic is quite interesting.

Because the info is unique, I may find a way of including it in the possibly upcoming book on Rightist socialism. Time will tell.