Bitcoin & Frankenstein
Democracy is accurately described as “two wolves and a lamb voting on what to eat for dinner,” but after the lamb is fully digested, the wolves are still hungry. What are they doing? First, they borrow, and then when that source is exhausted (excess debt raises interest rates, which makes the whole economy sober and lowers tax revenues), they print bogus money. Inflation is just another way to squeeze blood from a turnip population. This is a tax that is borne by consumers. It is a particularly harmful tax as it distorts and harms the entire economy. And when a country relies too much on it, the only thing it can expect is a terrible disaster.
In the absence of real money, central planners no longer have to ask voters or lenders for more money: they can “print” as much fake money as they want. The problem with fake money is that it distorts and destroys the real economy. As the amount of “money” increases, real wealth decreases. Since 2000, the FED has increased the monetary base more than 20 times, but GDP growth has halved. From 1950 to 1999, real GDP growth averaged 3.6% per year; from 2000 to 2020, it averaged 1.8%. The newly created money ends up in the higher prices of stocks and bonds first (because the FED buys them to lower interest rates and finance public spending). Later it manifests itself in consumer prices. And apparently that “later” is now, as we can see from the following chart regarding oil price expectations.
The central banking system is the best example of how socialism is prevalent today and its hypocrisy. Advocated by Marx/Engels in their work of 1848, we note today how quick central banks intervene when Wall Street is in trouble, but it is slow when Main Street is in trouble (inflation). The FED, for example, immediately reversed the course when a danger of continued declines slightly scared the financial markets (e.g. 2013, 2020, etc.); on the other hand, it continues to chatter about rate hikes and make excuses (e.g. transience) despite the fact that price inflation continues to rage.
This is a system that cannot be reformed, anyone who takes such a position is calling for more socialism. This system cannot be abolished, central planners who run it have built on it a scaffolding of privileges that they strenuously strive to support with anti-market actions. This system can only be bypassed and led to obsolescence, a task that Bitcoin is currently carrying out with exquisite efficiency.
Mary Shelley’s Frankenstein reminds us of how the natural sciences are something deeply flawed. Especially these days, this should be a lesson that should humble those on TV who ask for any nefariousness in the name of “science.” Not only that, but the monster represented nothing but the inevitable consequences for arrogance and pretense of knowledge.
Unlike the natural sciences, economic science is an exact science. Why? Because its basis is represented by human actions and human beings, as long as they live, will always be the same. But what is human action, if not the phenomenal manifestation of ideas? The single knowledge of each individual. Bitcoin, in fact, is an idea. Satoshi did not invent anything in 2008, he/she just followed his entrepreneurial instinct and merged certain concepts together, giving life to a Frankenstein. Now this “monster” is revolting against the arrogance and the pretense of knowledge of central planning, which has assumed the right to guide the projects of the single market players through top-down dictates.
The transparency and immutability of the BTC blockchain are the characteristics that most terrify the establishment. Bitcoin is inevitable. Bitcoin is irreversible. And now Frankenstein is tearing apart that supposed fabric of well-thought-out plans by state authorities. But unlike Frankenstein, Bitcoin is an idea, something that goes beyond the simple medium of exchange, and we are still far from seeing its full potential expressed. The multi-layer on which it can be programmed opens up to an epochal social revolution. In fact, as Mises said, ideas move history.
The purpose of central planners is to “improve” the world and the people who populate it; with their plan they say they are able to make the world a better place to live. Hitler also had a plan to “improve” the world, as well as Stalin, Peron and others. The purpose of those who use Bitcoin is not to improve others, but to prevent them from doing harm.