A narrative
Currently the monetary system is royally screwed. Most people can't afford an emergency expense if it's $400-500. Most people don't have savings. Most people are up to their eyeballs in debt.
Today one needs to be a professional investor to get ahead in life. Savings lose their value due to rampant inflation. I caught the investing bug at one point. Researching about budgeting and investing, I stumbled upon the FIRE (Financially Independent Retire Early) movement of bloggers and YouTubers. They showed me that retirement isn't just about saving money, it's about reducing expenses and investing the money you've saved. Cutting consumption... It's actually a very powerful part of the equation, and a lesson I still believe to carry weight.
The thing I think they get wrong is that index funds have succeeded thus far due largely in part by the immoral (see Cantillon effect mentioned in Inflation post) expansion of the monetary supply. They are therefore coupled to a system that is broken.
Enter Satoshi Nakamoto's whitepaper in 2009 just after the 2008 housing crisis and banks have just been bailed out. Satoshi releases a plan (and some code) to fix this by creating an alternative to the central bank. A system whereby everyone can be a sovereign individual with a swiss bank (not just bank account) in their pocket. During the pandemic for example, the fractional reserve system that banks operate under went to ZERO reserves. Banks no longer had to have assets on hand to cover liabilites.
Meanwhile with Bitcoin, you have a network where the total number of coins is fixed in the code (Yes it could technically be changed, but then it stops being Bitcoin and becomes a fork of Bitcoin. One that the users would resoundingly reject as false, and then watch as it withers and dies). That limit is 21 million.
Did you catch that? While central banks inflate their currencies into oblivion and we see currency after currency fail. Most fiat (latin for by decree and the name of currencies backed by nothing but the decree (and implied violence) of the mother state) currencies last only a few decades before they have to be abandoned. Usually this occurs after an over-zealous government has printed too much of the currency. So far the USD has avoided being relegated into nothingness due to its position as a global reserve currency.
In 1971, after printing like mad to fund the Vietnam war, Nixon suspended temporarily the convertibility of dollars into gold as the French showed up on our doorstep with a gunboat full of dollars that were now worth less. This has caused an insane cascading of effects. Over a hundred charts can be seen on https://wtfhappenedin1971.com/ showing just how things have changed. One change is that the price of an ounce of gold has moved from $35 to $1800 in just 50 shorts years. Whereas previously it was $20 flat for 200 years after the inception of the dollar as the US' currency.
Imagine if we could return to a stateless money system. But instead of gold ingots, a native digital currency that lives on the internet and is run by thousands of nodes and miners working harmoniously based on incentives to protect the network.
This is hardly concluded, but I'll leave it here.
Tomorrow (today is 2023-03-19) I'd like to discuss the bank runs that are happening.
