Draghi, Sound Money and Bitcoin Cash

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3 years ago

"We want to leave a good planet, not just a good currency" (Mario Draghi, February 17, 2021, first speech by Prime Minister to the Italian Senate).

The environmental issue, like the monetary one, focuses on the exact same problem: the systematic and legal aggression of private property by the State. Let us focus here on the monetary issue. Let's go deeper into the concept of "good money" that Draghi spoke of to Italians.

A "sound money", according to Draghi, is that which, being infinitely inflationable, loses more than a third of its purchasing power in less than twenty years: according to the explicit inflation targets of Western central banks, about 72% in 50 years; 87.5% in 82 years. In other words, "good money" is, for Draghi, the one that in less than twenty years reduces people's savings (and therefore economically sustainable investments) by more than a third. In art. 47, the Italian Constitution establishes that "The Republic encourages and protects savings": here, perhaps the Constituents thought that the best way to encourage and protect savings was to destroy them (in fact the rest of the article reads: "the Republic disciplines, coordinates and controls the exercise of credit ": that is, it substitutes the State for the market process, which is equivalent of destroying something). If X says to Y: "To improve the safety of your car, I destroy it by removing 2.5% of the engine every year", Y would take X for an idiot. When instead X says to Y: "To protect your savings, I will destroy them by decreasing their value by 2.5% per year", Y looks at him like an angel who came from heaven to save him. Why does Y have an opposite reaction in the two cases? Because he doesn't know what money is. The nature of money and the effects of its manipulation are quite complicated issues, which even the vast majority of so-called economists fail to understand: from Keynes to Nobel Prize Krugman (who in 1995 claimed that the impact of the internet on the economy would not be higher than that of the fax machine and in 2015 he stated that Bitcoin was a bubble destined to explode and a fraud). This complication of the monetary economy is useful to X (the State) to keep Y (the common person) in a state of subjection and to loot him systematically, relentlessly, while making him believe that it is working for his future.

A "sound money", according to Draghi, is that which, being infinitely inflationable, allows for artificially low interest rates. Artificially low interest rates further discourage saving, and therefore economically sustainable investment. The worst aspect, however, is that at the same time they signal to investors the presence of resources available for investments that do not actually exist. The result is cyclical economic crises (boom and bust). In addition to being the one that destroys people's savings, the "sound money", according to Draghi, is therefore the one that also takes away jobs from people.

A "sound money", according to Draghi, is one that can be further inflated thanks to fractional reserve banking. Fractional reserve banking is that system of artificial credit expansion based on embezzlement (analogous to the one in which parking owners could rent cars parked by their customers to others). If A deposits $1,000 in bank X, it keeps 1% of it as required reserve and lends the remaining 99% ($990) to B, which in turn deposits it in bank Y. Bank Y does the same and so on until the banking system as a whole, starting from that initial deposit of €$1,000, creates $99,000 out of thin air. As a further factor of monetary inflation, fractional reserve banking worsens and amplifies the cyclical economic crises mentioned above. It also implies that all commercial banks are in a state of intrinsic bankruptcy: in the event of a bank run, they would go belly up as the deposited money has been lent (the increasing ban on cash serves to prevent bank runs, which was the last remaining barrier to the banking system's ability to inflate at will). Much of the money created out of thin air through fractional reserve, is used by commercial banks to buy T-bonds. In order to lend to others the money that X has deposited in the bank (and on which he has full availability at all times), banks must legally appropriate X's money, but without his knowledge. "Sood money", according to Draghi, is therefore the one that allows banks to deprive people of the ownership of their money by making them believe, at the same time, that they own it. Thanks to Bitcoin Cash, people today have the opportunity to own their money (a non-inflationable market money resistant to state censorship). However, if they buy BCH they will generally do so only because they hope to make a profit and not because of the structural problems that BCH solves. This is the strength of Bitcoin Cash: its adoption is motivated by incentives (which everyone has) rather than an understanding of the monetary issue it was born to solve (which almost no one has).

A "sound money", according to Draghi, is that which, due to its loss of purchasing power, transfers resources from creditors (savers) to debtors and therefore the State is the one who gains the most, which is by far the largest debtor of all and the only one who can get into debt to make wars; and operates a transfer of resources from those who receive the new money first (the class of privileged and parasites that revolve around political power), when the new money has not yet had time to circulate and therefore to push prices up; those who receives it later (common people) have already seen surging prices due to the circulation of new money.

A "sound money", according to Draghi, is that which, in order to exist, needs a monopoly imposed by violence. In other words, it is that money which, if its use were not imposed by violence, and if competition were not prevented by violence, no one would use it. Y may not know what money is; however, if he could freely choose between savings (or getting paid for his work) in infinitely inflationable money that loses its purchasing power over time and non-inflationable money that maintains (and even increases) its purchasing power over time, he would not hesitate for a moment to choose the latter. It is the forced absence of freedom of choice that keeps him in his state of ignorance about what money is. Bitcoin Cash has opened a way out: not a political way out (politics is always the problem, never the solution), but an individual one.

With his "whatever it takes", Draghi is generally seen as the one who saved the euro. While, on the one hand, the fact (true, for now) that Draghi saved the euro is written and repeated in every newspaper, on the other the paradigm of State fiat money is never questioned. Perhaps, again, this is enough to give an idea of ​​how void of arguments that paradigm is: those who are strong in arguments (especially if they are logical) are not afraid of confrontation, especially on paradigms, in relation to which today there is a forced and total silence. If this silence were not imposed, before praising Draghi for saving (for now) the euro, it would be reasonable to ask whether the euro, not as an alternative currency to the lira (which was even more freely inflationable by the state, and therefore even worse than the euro), but as State fiat money was worth to be saved.

In an article on The Telegraph, Lord Sumption (judge of the British Supreme Court between 2012 and 2018) explicitly accused Matt Hancock and more generally the government of Boris Johnson of "tyranny" for having pursued a particular purpose by any means deemed useful, whatever the cost in terms of prosperity, freedom, humanity. In other words, for pursuing that particular purpose whatever it takes. "Whatever it takes" is equivalent to the Machiavellian "Ends justify the means" which Sumption rightly sees as the hallmark of tyranny. But why people who see the totalitarian nature of the formula "whatever it takes" are the same who often praise Draghi's monetary "whatever it takes"? Again, because they don't know what money is: not only they don't know its relationship with the economic process but not even that with freedom. Because of this ignorance, by praising Draghi they praise the same tyranny that they in other cases condemn.

Since Draghi is unable to understand the reasons why the free market process is superior to socialist centralization, then he is unable to understand these reasons in general. In fact, in his speech he says: "The government will have to protect all workers, but it would be a mistake to protect all economic activities indifferently. Some will have to change, even radically. And the choice of which activities to protect and which to accompany in the change is the difficult task that economic policy will have to face in the coming months”. A government with a minimum of respect for freedom and with a minimum of seriousness and competence in relation to its growth objectives would leave this task not to "economic (or monetary) policy", but to the spontaneous market process. The market process, in fact, is the only one that can make use of that particular, capillary and dispersed knowledge that is essential for sustainable economic growth and which no directing mind or centralized bureaucratic structure can dispose of. If Draghi doesn't understand the problem of the use of this dispersed knowledge in the case of the interest rates, obviously he doesn't understand even less in the case of the economic process as a whole. Because of this lack of understanding, typical of socialists, he entrusts a centralized bureaucratic structure with a task that can only be successfully carried out by the free market process, which is increasingly impeded.

The one who left the world with sound money (sound because it is not imposed by violence, because it respects the scientific laws of freedom and the economy, and because it is resistant to state censorship) was Satoshi Nakamoto, not Mario Draghi. And a sound currency is the prerequisite for a sound economy.

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Brilliant!

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3 years ago

Bitcoin and other crypto currencies have bright in future . Thanks for tell us about more information

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