“Zero Money”: First Principles Thinking About Monetary Value

Change the Money, Change the World (19)

Part 5(C) — Adaptation to Bitcoin with digital fiat

With respect to the current “Keynesian” monetary paradigm, investment in Bitcoin is no different from any other asset used as a store of value. It is denominated in the reserve currency for which it is sold and bought. It is used as a medium of exchange within its own peer to peer network bubble, but actually that exchange is existing inside the vastly larger dollar bubble. By “dollar bubble” I mean all fiat currency. In this part of the essay, focus is on the yet negative manifestation of digital currencies used to perpetuate fiat. This is how current monetary regimes are adapting to the Bitcoin standard. It is a top-down adaptation incorporating blockchain technology but retaining the exploitative inflationary properties of fiat.

Other adaptations to the high standards of Bitcoin will be addressed later, and are more bottom-up adaptations. Even with these, there are compromises regarding the core principle of maintaining scarcity of the medium and/or other features that may or may not be practical adaptations for bridging the legacy paradigm with a novel economic system. Adapting value storage and other monetary functions to some degree similar to the Bitcoin standard does serve the objective of Bitcoin becoming a bigger bubble within the dollar bubble for participating in the dollar bubble. In time, adaptation to Bitcoin standards along with actual adoption of Bitcoin evolves to the dollar bubble diminishing and eventually becoming within the Bitcoin bubble. This is the program for a “change the money, change the world” politics and protest. Elimination of fiat based on nothing is the remote goal.

Right now we are discussing fiat currencies of many nations will beginning to be converted to digital currencies, including the dollar, and perhaps there will be an international digital currency. Though we badmouth “Keynesian” economics, it was Keynes who actually wanted an international currency he called the Bancor, but consensus was for the dollar. Still, the term “Keynesian” is the functional term for the current paradigm. The adoption of of a blockchain form of fiat is a move to adopt the innovation of digital currency, but surely the objective will be to maintain some national hegemony. A digital USD retains the inflationary character of fiat. All these national digital currency adaptations are no doubt to remain susceptible to the hubris of oligarchs, their political puppets and central banks, or even pan-national private enterprises such as the IMF and the World Bank.

The poster child for this adaptation is of course China, where it is no secret the digital currency they are already deploying in test cities will work entirely at the behest of the CCP, and there will be no free market forces. Where they are deploying the currency, the sellers of goods and services to people chosen by lottery to receive digital currency, are stores and other businesses already authorized and equipped to complete the pilot program that will become the designed state economy for all of China. Other entities will obscure their objectives as “democratic”, which will in effect utilize a new digital form of currency to continue credit and debt cycles serving a few at the expense of the many. Chasing China, will require the U.S. seek to regain business as usual with a digital dollar replacing paper fiat, and so accomplishing a reset of the U.S. economy under the same two-party and Fed regime. It has not happened yet but the rhetoric is already clear. The European Union dominated by Germany and other Northern states, will see the Euro decline before the hegemony of the dollar. A digital Euro currency reset will attempt to sustain the infrastructure acquisitions of the Troika occurring in Greece, Spain, Italy and Portugal.

In reference to the ontological structure symbolized for “Zero Money” earlier in this essay, Bitcoin, as an absolutely scarce manifestation of value, would occupy the empty set [0] in the set of a new monetary paradigm, [[{-1,….},{+1,..}];[0]]. In this conversation its the a set of digital currency mediums replacing fiat. Positive and negative possible outcomes in establishing this new paradigm will depend on the allegiance to a political struggle to substantiate the truth in the properties of Bitcoin as the unit of account, store of value and medium of exchange — a perfect revolution =+1. If the CCP digital RMB captures the reserve currency status that would surely =-1, the epitome of a negative outcome and falsity as an epiphenomenon of scarcity. Continuing with the metaphorical representations, we come to other authoritarian regimes like Russia, then the so-called democracies such as the U.S. (“so-called” because, is a two-party monopoly really a matter of egalitarian free choice, or is it what Lenin called a “formal choice”?). Any nationalistic government central authority would eliminate the trustlessness and decentralization necessary for sound money. This is why pan-national political movements are in order.

To return specifically to what I would call the negative set of outcomes forming in the digital currency paradigmatic change: it would nonetheless mitigate a painful transition directly to the positive set of outcomes, and the positive set of outcomes would also mitigate a sudden, yet very improbable, adoption of Bitcoin as the world reserve currency upon the collapse of fiat. Would we really want to pay a price of completely failed nations, population displacements, cruel oppression like jailing children and worse, starvation, drownings … just to have a perfect digital currency immediately? Better to manage the disruption carefully.

Before discussing the range of positive outcomes in a digital currency paradigm in the next part of the essay, it is enlightening to follow a very pointed annotation by Simon Dixon of the speech by the IMF in October 2020 calling for a Bretton Woods renegotiation. It illustrates and exposes the very nature of the duplicity to be encountered by a pan-national political movement when confronting a reiteration of a Keynesian credit and debt scheme. Such is the plan by the IMF in creating an economic reset utilizing digital currency. Established in 1945, under the Bretton Woods System, gold was the basis for the U.S. dollar, and other currencies were pegged to the U.S. dollar’s value. The Bretton Woods System came to an end in the early 1970s when Nixon announced that the U.S. would no longer exchange gold for U.S. currency. The renegotiation the IMF wants is for a new international currency pegged to a digital currency under a centralized cartel of nations, such as operated through the IMF now. Here come the new boss same as the old boss:

IMF: Our founders faced massive tasks to deal with the immediate devastation caused by the war and to lay the foundation for a more peaceful more prosperous postwar world …

Simon Dixon (abbreviated): Explains that was how it was sold to the world, but what actually happened was a dollar backed by gold established as the world reserve currency, then in 1971 came removal of of the gold standard which was the actual start of the debt based Ponzi scheme we have today. That scheme is outlined after what the IMF speaker says later.

IMF: At the conclusion of the conference John Maynard Keynes captured the significance of international cooperation as hope for the world …

Simon Dixon (abbreviated): He points out it’s important to understand John Maynard Keynes was a socialist and he believed governments should step in and fix the economy in times of low employment because central banks controlling money policy doesn’t actually work. Dixon says this was the beginning of a socialist movement. It was a plan to move socialist economies into developing capitalist economies after the war.

IMF: The work of the IMF is testament to the values of cooperation in solidarity on which a sisterhood and brotherhood of humanity is built …

Simon Dixon (abbreviated): He translates that: the IMF and the World Bank use monetary creation to issue loans essentially backed by nothing. These loans are negotiated with developing economies who then issue tied loans to other countries needing even greater support. Those loans are tied back in having to spend that money in the more developed economies who get the benefit indirectly from the original loan. The country spending the loaned money gets left with the consequences of debt.

IMF: Today we face a new Bretton Woods moment. A pandemic that has already cost more than a million lives and an economic calamity that will cost the world …

Simon Dixon (abbreviated): A gradual process of inflationary lending mechanisms which are a hidden tax and currency wars which are hidden wars are always proposed by the IMF as a solution to every new crisis that emerges.

IMF calls for Bretton Woods Monetary Renegotiation As Predicted — Simon Dixon

https://www.youtube.com/watch?v=enmHW4gCkAY

Simon Dixon is an accomplished banking reformer and ex-founding director of the UK Digital Currency Association and author of:

Bank to the Future: Protect your Future before Governments Go Bust

https://www.amazon.com/Bank-Future-Protect-before-Governments/dp/1907720375

Well, you can see how this annotation of the IMF speech launching the initiative for a new Bretton Woods is political activism speaking truth to false substantiation of money in the world. The fact that this new IMF initiative is to employ a digital currency serving to introduce an international unit of account, store of value and medium of exchange is an effective reset of the current paradigm with one which is better. We should question, however, if its not just a new dollar just like the old dollar. What is the monetary creation based on, nothing, just as the dollar? What safeguards are there than it is not going to be business as usual creating “areas that are protected from everything else, others left in total poverty, and the criminal ideologies that prosper on the back of all this chaos”? This kind of scrutiny needs to be applied for all the blockchain solutions, and the financial ones in particular, as a new economic reset is accomplished, since many will be perpetrating negative outcomes, all or in part. What governments do, what banks do, what all institutions endemic to the existing power structure do, are suspect with respect to what could be a positive impact of digital currency propositions, but may instead have negative outcomes making them unacceptable.

Change the Money (1) Preamble — Monetary value true by nature

Change the Money (5) Introduction (1) — Zero Money & First Principles

Change the Money (8) Part 1 (A) The technological solution

Change the Money (10) Part 2 (A) The Naming of the Beast

Change the Money (12) Part 3 Ending Inflation and embracing deflation

Change the Money (13) Part 4(A) — Phases of transition 1

Change the Money (17) Part 5(A) — Adoption, adaptation & activism

Change the Money (18) Part 5(B) — Adoption of Bitcoin as store of value

Change the Money (20) Part 5(D) — Forks, Layers and Alt Coins