Bitcoin is freedom, Part 2

Melis
6 min readFeb 18, 2019

In short, today we aren’t free to make a promise, from individual to individual, without a third party that endorses it. It doesn’t matter if the third party is a dictator or an administration elected by the community, in both cases the individual must give notice of this promise and must scrupulously abide by the directives of the authority, which often provide for the payment of a tribute. And this happens even if the individuals involved in the deal have no need to involve the authority, nor intend to use it as guarantor, nor do they believe they need any kind of “protection”.

We think we are free to write, but we can’t stick to an accounting script that is not provided by the third party. We can write about fairies and elves, but not about debts and credits. For someone that kind of reality is very normal, perhaps as it was normal for a sixteenth-century farmer to profess only the religion of his own prince (eius regio, cuius religio). For some people it is normal that debts and credits stipulated among them must be authorized by a third party, just as it might be considered normal that the publications of a sixteenth-century thinker should be authorized by the Inquisition. Today we are free to write without the fear of being accused of heresy and sentenced to death, but we can be condemned if we don’t keep the accounts according to the dictates of an authority.

We have to use the currency of the third party, because we are compelled by law to accept it as a form of payment, with its structural malfunctions and all its problems, such as frequent frauds (for example on credit card transactions, with huge social costs). We are all forced to pay taxes exclusively with it, and the third party must be aware of the movements made with other forms of value (such as foreign currencies, or other securities). Above all, however, we can’t transfer our money to others without authorization, neither to ourselves! In fact, any transfer that isn’t carried out with cash, requires the bank intermediary.

Sound money, either metallic or paper, although it was born spontaneously from free interactions between individuals within the market, for centuries has been a tool monopolized by the authority. Therefore also the role of disintermediation of the “physical” currency is disappearing, given the ever narrower limits of its use, banknotes that are removed from circulation, the withdrawals of higher amounts that are impossible and subject to endless controls, etc. The majority of transactions now are digital, using credit and debit cards or online payments. The role of cash is getting smaller.

With the gradual disappearance of cash, human civilization is experiencing a complete and Orwellian collectivization of the reserve of value. In fact, banks aren’t the custodians of our money, but, technically and legally, have the property of it. Thus, money we keep in banks are not ours, as stated in Article 1834 of the Civil Code:

In the deposits of a sum of money in a bank, it acquires ownership and is obliged to return it in the same monetary specie (1272), at the expiration of the agreed term or at the depositor’s request, with observance of the notice period established by the parts or uses (1782).
Unless otherwise agreed, payments and withdrawals are carried out at the bank’s premises where the relationship was established.

The bigger the banks are and the more they collect everyone’s money, the greater the fractional reserve banking they can engage in, because when we send money to someone, it is very likely that money will stay within the same circuit if sender/recipient share the same bank. Therefore, less cash is used and the incentive for commercial banks to make monetary expansion is greater.

We all agree on the atrocities of communism, but we aren’t able to realize that until we don’t achieve monetary freedom, the current system will always remain totally collectivist… not so different from the Soviet one. If at the time of the USSR prices were fixed by the regime, today we have the distortion of prices due to monetary expansions. We could justify ourselves by saying that this distortion is an unintended consequence that mainstream economists cannot forecast. But the basic problem is not technical, it’s cultural. Today culture is still the collectivist one of the worst examples of the 20th century: just look at milk quotas applied in Italy to make production contingent in order to fix the price.

The distortion of prices and interest rates is just one piece of the puzzle. The inflation tax is also not conceptually very different from expropriation and redistribution of land in Soviet Russia. If Stalin deprived peasants of the entire family patrimony by subtracting their lands, even in the most civilized American “capitalist” society, the State deprives the families of the entire patrimony. It does so more slowly over time… In a century the dollar has lost 97% of its value, bringing to almost zero the purchasing power of the capital transmitted in inheritance over the generations. This means canceling debts to the detriment of creditors, as if part of their past work (lent in exchange for a future promise) would be “canceled” from the accounting records. The progressive loss of value of the currency entails a redistribution of wealth from individuals to some specific entities that represent the biggest debtors of today’s society: the banks and the State. The lira has performed much worse than the dollar, zeroing its value over a century (it lost about 97% of its value only from 1947 to 2002). The euro has lost 25% of purchasing power since 2002.

The goal is not to go back. Monetary expansions and fractional reserve banking were practiced way before Bretton Woods, who ended the dollar’s peg to gold. The Federal Reserve, for example, was founded in 1913 and from 1921 to 1929 brought the monetary base from $37 to $55 million dollars. The expansion of the years before the Black Monday of New York in 1987 is even more disturbing (the monetary supply went from $25 to $40 billion dollars in just 3 years). In fact, there is evidence of the first monetary expansions and fractional reserve applied by the first bankers (Pasione) since the age of ancient Greece (Trapezitica di Isocrate, 393 BC).

Today we are told that the economy is cyclical and central banks need to bring stability. It’s a stupid joke. The economy could be cyclical at the time of autarkic polys, where weather conditions could dictate the fortune of an entire year. Today, especially in a globalized world, “cyclicality” can be dictated by only one thing: policies that distort free market dynamics. Monetary expansions are the root of all evils, but are invoked as a cure, like the drug addict who takes drugs to calm the symptoms of abstinence. The economic dynamics are those that Hayek revealed by analyzing the phenomenon from within the FED in the years before the Great Depression, dynamics studied by economists such as Rothbard. But these scholars, along with others like Huerta De Soto, Mises, Menger, aren’t even mentioned in school books.

Today there is no longer any need for coercive power in the monopoly of the monetary instrument. Simply, there are technological solutions that allow us to fulfill the same ends respecting the will of individuals and without resorting to the exercise of violence. It is not backward that we must look, we must not remedy the presumed atrocities committed in the past. There has never been a better past. Humanity has always made progress by looking at the future and the next step is Bitcoin.

Click here to read Part 1: https://medium.com/@melis.io/bitcoin-is-freedom-part-1-e88b4d5c00c6

(h/t to Alberto de Luigi and albertodeluigi.com)

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Melis

MultiSignature, MultiUser, MultiDevice Bitcoin, Bitcoin Cash, Dogecoin, Litecoin, Bitcoin SV, BCHA, Groestlcoin Wallet: https://www.melis.io/