“Zero Money”: First Principles Thinking About Monetary Value
Change the Money, Change the World (16)
Part 4(D) — Phases of transition to a novel paradigm 3
I continue with a description of the third and fourth of the four phases that need to occur. Each successive phase is built on the previous ones, during the time the previous ones are being completed. I began with three clear examples of things actually happening already. Then the previous section discussed more significant and disruptive trends not yet fully recognized in the consciousness of the general public, including radical social change issues that will drive transitioning out of the existing economic paradigm. The third phase and fourth phase, simultaneously developing as the first two phases are concluding, are the more profoundly disrupting of the current economic model. Personal monetary sovereignty will emerge in the context of a decentralization of governing power structures, while political and financial bridging develops for completing transition to a novel monetary paradigm:
3. Subjective absolute sovereignty for sound money in decentralized power structures
From the beginning, the first principle of subjective absolute sovereignty should be key to sound money policy decisions made in governance at the objective register. Essentially this means fostering decentralized power structures because an individual or group of individuals have proven susceptible to hubris. This begins with the choice of the best monetary medium for the store of value. The best choice would reflect the natural phenomenal first principle idea of scarcity as the root of the epiphenomenon of maximum value for a medium in objective reality. With this basis, a transition can begin to supplant the “Negative Money” fiat system with “Zero Money” for a free market medium of exchange. The transition needs decentralized governance to succeed.
a. Nature is an absolute subjective reality with an infinite sovereign domain that is qualitatively true, and this unitary Consciousness manifests a potential for the objective reality of multiplicities. Scarcity congruent with the absolute subjective sovereignty of nature in objective manifestation has not happened, not even with the adoption of gold as the monetary medium. This has been clear even since we saw gold as the adopted reserve used to create a currency pegged 1:1 to the value of gold. Just as before such currency, when gold coins were shaved, or melted and re-issued at lower weight, from the beginning, printed pegged currency was devalued. It was soon issued in amounts and denominations exceeding the gold for which it could be redeemed. This began the erosion of trustlessness in the medium of exchange leading to abandoning trustlessness altogether with the advent of fiat currency pegged to nothing.
b. Centralized governance of gold reserves is an essential feature in the present economic power structure even though it is not backing fiat currency. A return to the gold standard would not free society from the hubris that violates the absolute subjective sovereignty of nature reflected in the whole of humanity. Instead, a small minority of individuals use the present economic power structure to serve their own greed rather than share available value. Sharing value would be an egalitarian economic paradigm. Such an egalitarian economic power structure would by definition be decentralized. We need something as scarce or more scarce than gold as a medium, a medium that need not require printing of paper money. It is happening now in the technological disruption afforded in the information age with saturation of the planet by computer networks running algorithms designed to keep stored information inaccessible as possible to centralized governance.
c. A core technological innovation has emerged. Blockchain technology embeds an algorithmic structure that employed in computer networks affords a unique necessary feature for sound digital currency applications. That feature is a new way to store value that is maximally secure from access by anyone other than the single entity that places that value on the blockchain. The various world currencies can have their value moved to this storage, where that value actually becomes no longer a part of the present economic power structure. Being but a store of value, a digital currency has the potential but not the actuality of a unit of account or being a medium of exchange in the domain of the present economic power structure. It can have those additional functions, but only within the far smaller population of digital currency holders engaging in peer to peer transactions, which by definition is decentralized. Imputing value and outputting value from the blockchain from and to the legacy financial system requires participation in that system of centralized governance. The transition to a world comprised only of sovereign individuals engaging in peer to peer monetary transactions constitutes a quiet revolutionary movement rooted in first principles thinking about value. It is an adoption of a novel economic paradigm having profound political and financial ramifications.
4. Transitional political and financial bridges to a novel monetary paradigm
Beginning during phase 1 and going forward, is the need to create transitional political and financial bridges targeting a completely novel monetary system. Phase one is about continuing best practices for the fiat Keynesian paradigm to mitigate its negative outcomes. Phase four is completely different strategies for evolution of a “Zero Money” world economy. These strategies must be not only disinflationary but also embrace the inevitable deflationary forces of technology.
4a. Selection of a medium of money is the initial decision. Gold has served as a medium for a hedge against inflation, though specific disadvantages led to the need for gold backed currencies subject to poor governance. It is very significant to remember that gold reserves are not in decentralized possession of the masses. They are owned by governments (some explicitly authoritarian, the rest dominated by oligarchical donors). For this reason, and because of the deflationary impact of technology, we need to evaluate technological mediums of money. Generally known as “cryptocurrencies”, these offer various degrees of maximized resistance to centralized governance, as well as to some extent possessing characteristics of fungibility, divisibility, and transferability. It remains a question as to whether 99.99% of such cryptocurrencies will have capacity for all functions needed for a viable currency: becoming the unit of account, for storing of value and for transactions in peer to peer exchange.
4b. Mass adoption of such a novel monetary system will for a long time require bridging decentralized finance systems with the legacy system. It will require pan-national political movements to resist the combinations of centralized political and central bank regimes with “criminal ideologies that prosper on the back of all this chaos” (Badiou). There are such decentralized political movements countering nationalistic and populist movements which are seeking and maintaining exclusive dominance of economies through currency manipulations. I will highlight some proposed ideas about using monetary and fiscal mechanisms that are of a transitional quality, that embrace technological currency concepts for governance of fiat currency. Such transitional mechanisms avoid a too quick embrace of the deflationary system of decentralized digital currency. They thereby counter nationalist and populist attacks by managing the extent and degree of disruption. Transitional strategies for governance of monetary policy is a primary part of a platform of pan-national political organizing. I will come to that in later in Part 5.
4c. The cryptocurrency branded as Bitcoin is the only one that has both a demonstrable level of current and projected mass adoption as a store of value, while at the same time offering investors total allegiance to the first principle of scarcity. It is also the only one adhering to a 100% decentralized “governance”. I use quotation marks because the eponymous creator(s) of the algorithmic structure of Bitcoin, Satoshi Nakamoto, established a structure exclusively for peer to peer transactions. Only 21 million Bitcoins will ever exist, and that institutes an absolute scarcity. Plus, no one can modify the record of any transaction, ever. These transactions, every one that happens or has happened are forever maintained on the Bitcoin blockchain. The details of those transactions are transparent to anyone. Basically, because nothing else has been designed with all these features, Bitcoin has become the viable choice of a monetary medium for a novel monetary paradigm reflecting first principles thinking about monetary value, satisfying the metaphorical representation in “Zero Money”.
4d. Transitional political and financial bridges inevitably entail a function of governance. These bridges eventually remain part of new egalitarian economic power structure until the withering away of the legacy paradigm. Then, a new economic structure in fact becomes the existing paradigm. What is projected is that the monetary medium that best shows allegiance to the first principle of scarcity, as well as maximum possible decentralization of governance, will at its core have the properties that have been branded as Bitcoin. It begins as a store of value then eventually it approaches being the unit of account and the medium of exchange. Part 5 will explain those core properties of Bitcoin, how and why mass adoption is occurring, how those properties relate to adaptive mechanisms layered on that algorithmic structure, what such related structures may effectively serve or not serve the economic revolution, and what political activism will be necessary to win that struggle.
Nobody knows how all this will actually ensue. It is history in the making, so I am engaging in the necessary dialog, study and personal action that are inevitable. Its personal because I believe we need and are evolving personal Person to Person monetary sovereignty free of third-party governance. Anyone who as they say “goes down the rabbit hole” with the thesis I am espousing can join all of us who have made the decision to keep Bitcoin as a store of value. We store to whatever percentage of our current cash makes sense for one’s own personal circumstances and conviction. One can simply hold it, or perhaps also be inspired to be additionally proactive in whatever is possible for him or her in helping “change the money, change the world”.