In March of 2023, a banking crisis arose as an active threat to depositors of two banks and a potential threat to many.
April 21, 202314 minutes read
In March of 2023, a banking crisis arose as an active threat to depositors of two banks and a potential threat to many. At the time of this writing, Signature Bank and Silicon Valley Bank collapsed, defaulting on $263.6B of deposits. These two banks together achieved the highest mark of failed U.S. bank deposits in one year. In that same week the federal reserve lent out a record $314B to banks in one week to cover their liquidity issues; all the while at 4.75-5% interest rates.
Shortly thereafter, Credit Suisse, a top 50 bank in assets (well over £1T), was the product of a firesale to United Bank of Switzerland (UBS) for £2.65 on March 19, 2023; almost a 66% discount on its valuation. The Bank of England also pleads to businesses to sacrifice profitability and incorporate price fixing to fight inflation.
“If all prices try to beat inflation then we will get domestic inflation that will start repeating itself. Higher inflation really benefits nobody and particularly hurts the least well-off in society.”
Banks collapsing at a record volume, the Federal Reserve Balance Sheet spiking and the Bank of England encouraging Soviet-like price controls sounds like catastrophic times. But you wouldn’t know by interacting with the public. There is generally a sense of apathy instead of concern toward these topics.
Legacy media has incited fear in the hearts of its loyal consumers for four years. The constant pressure to stay inside, wear a mask, engage in a racial civil war, receive an injection for the public good, and rationalize unlimited spending on a war for “democracy” has been an operational test and evaluation on the boundaries of individual liberties and property rights of people all over the world. Now this same mechanism is being used to pacify the people exposed to the greatest risk to their earnings and savings they have ever faced.
Speaking with a few unnamed people close to me, I have heard some troubling perspectives about these economic conditions. Some people who hold these views can be categorized as normies: people too distracted by the frivolities of life to consider significant issues. Yet still, some others identify as Bitcoiners in principle. Even those who celebrate Satoshi’s invention can still exhibit ideals that would contradict the freedoms conveyed by the Bitcoin Network. In our technologically advancing world, these ideals, if manifested, will also streamline lives into a fascist dystopia that leaves no opportunity for individuals to fully pursue life and liberty.
Friend A plays basketball with me on occasion. He indicated skepticism when I mentioned Bitcoin. He said, “We must always have physical cash.” When asked about what happens when governments enact central bank digital currencies (CBDCs) and retire anonymous paper money, he indicated, “We have to fight for and demand it” because “it’s our right.”
I think Friend A has a few rabbit holes to dive into, and I promise to help him along. His confusion between Bitcoin, crypto, and CBDCs, has likely not been helped by any Google search on the topic. He is likely left with dead-end jargon such as “too volatile,” “uses too much energy,” “governments can ban it,” “no intrinsic value”, “used by criminals”, and maybe a “China!” wildcard on occasion. While each of these FUD topics has been and will be exhaustively explored, my chief concern with Friend A is his notion that he has the right to demand something from another entity, especially the state.
“The truth is, one who seeks to achieve freedom by petitioning those in power to give it to him has already failed, regardless of the response. To beg for the blessing of ‘authority' is to accept that the choice is the master’s alone to make, which means that the person is already, by definition, a slave.”
This quote, while accurate, is extremely hard to manifest in the real world, where the techno-state is so ubiquitous. There is no real freedom in asking the state for freedom. That would imply the state has the power to give and deny. There is no true freedom in simply speaking it into existence. The “word of power” or “name it, claim it” as propagated by wealthy mega churches would measure your morality by your divinely granted earthly prosperity. However, much like the shallow carnality of that Christian sect, the idea of simply speaking your freedom into existence while pacing in your real prison cell is hardly a real solution. Throwing words into the air with no substance or action is a coping mechanism for a bleak reality.
It is important to remember to whom the fiat currency belongs. Federal Reserve notes are property of the Federal Reserve System (18 USC 333). To claim unlimited rights to its use is asinine. To claim ownership of someone else’s production or property violates axiomatic first principles of property rights: you cannot lay claim to someone else’s work unless they have gifted or exchanged it free of coercion with you. In the case of the fiat, even the ones in your pocket, it is the property of the Federal Reserve Banks. Therefore they have the unilateral right to do with it as they please, including discontinuing their use. While demanding the rights to someone else’s property is a vain socialist pursuit, it is not our only option. But Bitcoin…
Friend B recognizes the evils of central banking and realizes Bitcoin is hope for all people. He hopes to see Bitcoin’s dollar value exponentially increase in the near future. However, his disposition toward CBDCs is interestingly nonchalant. He believes CBDCs are very similar to the money system we have now, as we currently have a digital dollar.
I believe Friend B can be described as “optimistically ignorant.” A society that does not recognize the dangers of impending attacks limits its ability to fend off assaults on its existence. CBDCs are quintessential attacks on individual freedoms. Imagine playing a video game like Grand Theft Auto, and you use money cheat codes. The catch is that the code does not empower you but hinders your ability to play freely and naturally. Imagine a world where these things are possible:
- Credit Account Funds are unable to transact for 1-14 days due to the severity of a regulation/code/law violation.
- Savings Account Funds interest has reduced from 0.5% APY to -2.0% APY to collectively contribute to fixing systemic economic risk from irresponsible institutional investing.
- Paper cash has been removed for circulation to tax any value exchange, even as intimate of an exchange as a parent to child.
- Traveling 25 miles away from your registered residence for longer than 14 days will result in Saving Account Funds penalized 1% for every additional day outside the domain; the unauthorized exit of the country results in the immediate forfeit of all funds.
- Spending credit account funds at state-sponsored establishments will result in a 3% end-of-month rebate (assuming no social credit violations); spending credit account funds at disapproved establishments will result in an immediate 3% extra tax payable to the state office.
The rules listed above are part of a game no one wants to play unless they are on the side of the state. While these conditions are not real or even certain if CBDCs become a reality, these are a real possibility, and there would be little individuals could do to prevent the extent of their reach. To claim we have a CBDC now or it “likely will not be that bad” speaks to a level of comfort and dismissiveness many first-world humans have while the oppressed world currently suffers under the future dystopia we joke about or opine as if it were science fiction.
We can argue what state entity would be the last bastion of freedom (Switzerland, Ireland, Texas,…) before CBDCs would engulf the world. What is not up for debate is whether there is a mutually beneficial solution for all people to defend their earnings as state actors seek to covertly create economic weapons to use against their own people. The technological future is bleak for the working-class individual. But Bitcoin…
Friend C is well-read and a very complex thinker. He is passionate about macroeconomics and has refined his thoughts beyond the “Bitcoin = $$$ gainz” smooth brain thought patterns. However, he adamantly pursues a “smooth” transition. He even prefers delaying “hyperbitcoinization” (the resulting world where Bitcoin is the chief or only monetary network) for the sake of those dependent on the fiat infrastructure and for more people to adopt Bitcoin.
To seek out stability can be interpreted as peaceableness. It is natural to desire to prepare as many others as possible for such a monumental transition as the death of fiat currency. However, it is important to remember that the idea of stability is one of the chief pillars that encouraged the creation of fiat, establishing of worldwide central banking, and removing the dollar from the gold standard. So whose version of stability is better: Jerome Powell’s or Smooth Transition Bitcoiner? Looking at “stability” as the measuring stick, it is better to not make any change at all, for any difference in the state of being is always less stable than no change at all.
Arguments can be made regarding the fear of pensions and retirement funds being demonetized. Government careers will be put at risk if there is no money to print to pay them. Government healthcare plans in the West would fall apart. Many schools at all levels would lose their funding and cease operations. For a moment in time, there would be no police to call nor someone to fill in the holes in the roads.
Does this sound like mass hysteria to you? To me, it sounds like a typical day in many parts of the world (e.g., the Global South). In these places, the individual is placed at a categorical economic disadvantage by being forced into using money that is a magnitude worse than whatever shortcomings we find with the dollar or euro. The fringe nightmare of the citizens in privileged regions is the daily reality of 75% of the people in the world. Every day in this status quo is another day of freedom violation. How long should the world suffer for the sake of stability?
It is said that history echoes. This conundrum is very similar to when the United States woke up to the slavery-based economy being a violation of natural rights. The prevailing strategy toward the liberty of the enslaved people was a compromising one of gradualism. Essentially, to not inconvenience the human thieves who profited off of wrongly embondaged humans, it was suggested to slowly release slaves over time. Each day a slave is whipped and forced against his will to labor; the great thinkers not quite 200 years ago thought this “smooth transition” was an appropriate action. Do we not care about the inconvenience of the violated? Murray Rothbard captured abolitionist William Lloyd Garrison eloquently in Ethics of Liberty:
Thus, the libertarian abolitionist of slavery, William Lloyd Garrison, was not being “unrealistic” when, in the 1830s, he raised the standard of the goal of immediate emancipation of the slaves. His goal was the proper moral and libertarian one and was unrelated to the “realism, ” or probability, of its achievement. Indeed, Garrison’s strategic realism was expressed by the fact that he did not expect the end of slavery to arrive immediately or at a single blow. As Garrison carefully distinguished: “Urge immediate abolition in the end. We have never said that slavery would be overthrown by a single blow; that it out to be, we shall always contend.” Otherwise, as Garrison trenchantly warned, “Gradualism, in theory, is perpetuity in practice.”
Let us not be fooled. It was more so the 2nd Industrial Revolution and weaponized politics that made slavery obsolete rather than the kindness of a president or the Union. This does not negate the fact of the unethical existence of people stealing. It is a proven fact of the many natural rights violations of fiat currency, from the intrinsic theft in the Cantillon Effect of money printing to the illicit denial of free market value exchange through sanctions. To advocate for delaying or slowing removing these atrocities is to justify their very existence. This choice of gradualism is essentially exchanging one central planner for another. Both think they can control the economy the best. But Bitcoin…
These three friends are each aware of the need for safeguards against malicious actors or misappropriation of value. However, they miss the mark on a few things that Bitcoin is designed to combat.
In a world where the state dominates the physical domain, you must go to the digital domain, where the state has not and can not completely homestead or claim for itself. Thanks to the internet being natively open-source (TCP-IP), anyone can build upon the protocol. The Bitcoin Protocol is also open source enabling any participant to join or leave of their own volition. A government does not own nor can it ever own Bitcoin.
Therefore, your ability to transact is preserved natively by the code. This cannot be said about even physical cash; whereas you use it, the new owner may opt to give it up to a bank where they have the right to hold it out of circulation, retire it, or create more of it. While physical cash advocates care about privacy and 3rd party custodial risk, they should research more about Bitcoin as this network will meet the use cases of physical cash and other asset classes.
If you discount the capability of state coercion, you discount your ability to defend yourself against their inevitable advances. This is a paraphrase of the Lao Tzu quote:
“There is no greater danger than underestimating your opponent.”
CBDCs will be a tool that people in some domains will not be able to escape because they were not aware nor cared enough to defend their monetary wealth against those that would seek to control it. It is the end game product of the Nixon Bank Secrecy Act of 1970 as money will have fully evolved into a system of control and negating the three functions of real money (medium of exchange, store of value, unit of account). Bitcoin is, thankfully, the antithesis of this monster that can enable you to maintain the three functions of money in their truest form.
This is due to the Bitcoin Network’s four utility features: permissionless, trustless, immutable, and transparent. While crypto advocates claim Bitcoin does not have utility, these four features are the most important of utilities in that they ensure you can preserve your ability to exchange value regardless of what any 3rd party says or wishes. Those with power and resources are incentivized to build the tools necessary to maintain and grow their stake. Bitcoin is a protest and protection against those actions. Do not expect the elite to easily give up what they have. There is no hope in this fight without the Bitcoin Network.
If you advocate for delaying the removal of an atrocity, you are advocating for its legitimacy. There is nothing sophisticated about making people stay in a perverted monetary system a day past its recognition as a violation of natural rights. Bitcoin is continuously functional and does not crash like the affinity scam crypto networks. The layer 2 Lightning Network (LNP) enables instant transactions for people that care about buying small quick items (e.g., coffee, sandwich) without waiting 10 minutes for a block to be mined. Bitcoin is ready to be used. Are people so fearful of change that they seek the shelter of their oppressor without a second thought? If fiat is stealing from people, the best time to end the violation is yesterday!
To think that the existing financial system will go away peacefully is asinine. Their incentive will always be to persist at the expense of the less fortunate. If that means lying, cheating, stealing, or even killing to maintain their advantage, there is no doubt in my mind those in power will take those actions. However, there is also no doubt that Bitcoin’s adoption, network effect, and proof of function will continue to drive its market capitalization higher, enriching and securing its participants. Additionally, there will come a time when getting paid or partially paid in Bitcoin will be a normal form of compensation. So even if many people are left out of the hyperbitcoinization phase, hurrying to a future where people earn hard, unconfiscatable money is infinitely better than waiting for people to buy in for a “nice trade.”