By Taking Out Control of Money From the Hands of Governments, Bitcoin Is Our Chance to Have Good Money
“I don’t believe we shall ever have good money again before we take it out the hands of governments.”
— Friedrich Hayek
I begin this story with a quote from 1984 by Friedrich Hayek that is as relevant today as it is in 2020 when we are experiencing the great monetary inflation.
If you don’t know who Friedrich Hayek is, let me quickly introduce him to you.
Friedrich Hayek was a Bitcoiner even before Bitcoin existed
Born in 1899 in Vienna, Austria, Friedrich Hayek is an economist and philosopher recognized as one of the most important thinkers of liberalism in the 20th century.
Friedrich Hayek worked in the field of the information economy, analyzing, in particular, the causes of economic crises, especially the 1929 crisis. He developed a theory of entrepreneurship, the role of political institutions, and the reforms he believed were necessary for the modern monetary system.
He belongs to the Austrian School which advocates different liberalism from the majority neoclassical liberalism which consists of challenging the mathematization of the economy, in considering that economic crises are caused by speculative bubbles.
In this respect, Friedrich Hayek thus separates himself from the dominant model embodied in particular by Milton Friedman.
Friedrich Hayek knew during his life different monetary systems. He knew the gold standard system set up at Bretton Woods at the end of the Second World War, then the current system set up unilaterally by Richard Nixon in August 1971.
Friedrich Hayek has spent his life alerting people to the dangers of the current system
He has always been very critical of this system. For Friedrich Hayek, it was essential to have competitive money outside the control of the States. This would be the best protection against the risks of inflation.
For Friedrich Hayek, it was obvious that inflation decided by governments has always been carried out solely for the benefit of the governments themselves:
“I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”
Today, many people think that money should absolutely be a prerogative of the States. In his book “The denationalization of money” published in 1976, Friedrich Hayek argued for a money market outside the monopoly of the States.
According to him, it is essential to move away from the dogma that money should be the responsibility of the States.
Friedrich Hayek considered that money should not be the prerogative of the States
This conception, which seems obvious to us today, is very recent. In the Middle Ages and until late in history, the control of money by the royal power was limited to certifying that a gold coin was equal to one gram of gold.
Kings did not have the power to act on the money supply in circulation as central banks do today.
Friedrich Hayek, who died in 1992, must be turning over in his grave after seeing central banks print more than $10 trillion out of thin air since March 2020. Friedrich Hayek was already concerned about all this in the mid-1970s.
For him, the big culprit was the English economist Keynes. He was guilty of pushing strongly the idea of control of currencies by governments and central banks.
To stop this inflationary spiral, Friedrich Hayek saw two possibilities:
- A return to the gold standard, which makes it possible by the scarcity of the precious metal to limit inconsiderate monetary creation.
- Or a competition between currencies.
Bitcoin is the solution Friedrich Hayek dreamed of
The emergence of Bitcoin is thus the realization of Friedrich Hayek’s dream.
Indeed, Bitcoin exists in limited quantities. There will never be more than 21 million BTC in circulation. The monetary policy of Bitcoin does not depend on any arbitrary decision of humans.
Written into Bitcoin’s source code, Bitcoin’s monetary policy is programmatic. Everything is inevitable with Bitcoin.
New Bitcoins are not created out of thin air. Each Bitcoin produced will have required a significant consumption of energy. Anyone who criticizes Bitcoin on this point does not understand that this is precisely what makes Bitcoins so valuable.
The M2 Money Stock increased by more than 3,000 billion dollars in a few weeks between March and June 2020. This was done with a simple snap of the finger.
Bitcoin gives power to the people
This is something impossible to do with Bitcoin. It is no coincidence that many people now wonder if their fiat money still has any value. I’ll let you ask the question yourself. For my part, I’ve already answered it, and that’s why I’m betting so much on Bitcoin.
Bitcoin has no leader. It is an open system that belongs to all its users. Bitcoin is the first step in taking out control of money from the hands of governments.
For Friedrich Hayek, Bitcoin would probably have been seen as our only chance to have good money available again.
It remains to be seen whether Bitcoin will be able to replace the U.S. dollar in the future as the world’s reserve currency. This would allow the rebirth of a system equivalent to the gold standard that stabilized and then reduced global wealth inequality from 1944 to 1971.
Bitcoin is a real opportunity for humanity. The opportunity to have a fairer system for all to offer the same opportunities to all users.
The transition will not happen overnight, but I believe that as economic crises continue to hit the world because of the flaws in the current monetary and financial system, more and more people will open their eyes.
Once these people understand that the current system is one of slow but inevitable generalized impoverishment, they will decide to switch to the only credible alternative that exists: Bitcoin.
It is only a matter of time before the people recover power over money through Bitcoin, which is the money of the people supported by the people. The monetary revolution is underway, and nothing can stop it now.
It is up to you to decide if you want to be part of the Bitcoin revolution to take full advantage of it.
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(Disclaimer: This story contains an affiliate link for the book “The denationalization of money”. If you choose to make a purchase after clicking this link I may receive a commission at no additional cost to you. Thank you for your support!)