On 22 July 1837, a popular Democrat of his time and a renowned intellectual leader, William Leggett, wrote the following in Ohio’s The Plain Dealer newspaper: “In the complete separation of government from the economic system consists the chief hope of renovating our prosperity, and restoring to the people those equal rights, which have so long been exposed to the grossest violations.”
A long-forgotten writer of the 19th century, Leggett’s work is becoming more and more prophetic as time progresses. With each day passing, the financial systems of the world face mounting pressure, with likely recession on the horizon. This pressure seems compounded by world governments’ desperation to keep their GDPs on eternal upward growth curves, leading to some of the “grossest violations” Leggett spoke of.
The effects of inflation
As far back as the 1st century, the Roman Empire began debasing its silver Denarius in order to stimulate its sputtering economy. Debasement is simply the reduction of precious metal in a coin used for currency, and in essence, was a primitive form of inflation. The Roman government realised it could increase the amount of coins in circulation without having to use the equivalent amount of silver, and essentially could “print money”.
This primitive inflation, however, had devastating consequences. It had the natural effect of the Denarius eventually losing its value, causing the economy to contract significantly. This, in turn, led to a depopulation of Rome as citizens returned to their homesteads where subsistence farming made more sense, and finally the fall of the Empire by the late 300s CE.
As Isaac Newton so succinctly put it: “For every action, there is an equal and opposite reaction.”
You cannot create value out of nothing, despite what the early Roman economists thought. And while they may not have seen it in their lifetimes, the reaction to their actions did indeed come to fruition.
May today’s governments heed this lesson.
This is why Leggett’s statement is so poignant for us today. The Roman government had the power to debase its currency, which had a direct impact on its citizens (no matter how much later it may have been). It is irresponsible and, quite frankly, dangerous for governments to hold the power of the people’s wealth. And by having the ability to “print money out of nothing”, that is exactly the power they hold.
Enter Bitcoin
Central banks today, such as the South African Reserve Bank, the USA’s Federal Reserve and so on, all have the ability to “inflate the amount of currency in circulation” through a number of means, and they are doing this exact thing even as you read this article. Just a few weeks ago, the European Central Bank announced a fresh round of “Quantitative Easing”, a less frightening term for “money printing”. And America’s Federal Reserve injected freshly minted currency into that country's system in a desperate bid to ward off an economic pull-back.
Some economists would argue that ever since the US stepped off the “Gold Standard” in 1971, inflation became possible for the world’s largest economy. But technically, this isn’t true. Ledgers that accounted for US dollars in circulation, in relation to gold bullion held in reserve, were themselves held behind closed doors, impossible for the public to truly know just how much “fiat currency” (paper money) was in the system versus physically backed gold. Besides, as was the case of the Roman Empire, how are citizens to know if gold coins are even authentic without professional verification methods?
Bitcoin solves all of these problems. Mathematically coded to have a finite supply of 21 million, its economy can never suffer the same fate as other inflated currencies. With its ledger being transparent for all to see at any time, on what is now commonly understood as an “unchangeable” blockchain, the verification of Bitcoins in circulation is as easy for a child familiar with Minecraft as it is for a software developer.
This means that, like gold, its finite supply can never be artificially manufactured, unlike fiat currencies of today. But unlike gold, it’s much easier to verify if it is indeed real Bitcoin by simple wallet authentication; in other words, Bitcoin wallets can only accept real Bitcoin. It’s really quite simple.
Leggett was passionate about the separation of state and economy, and with Bitcoin we finally have a viable avenue for this to happen. Created by “the people”, it to this day remains in the hands of the people. Governed and updated by the people, who all vote for any suggested edits to its code, it cannot be adjusted or changed at the whims of governmental impulses; impulses that are mostly driven by the fear of economic recession, because such a recession would affect political success.
But you can’t run from the truth forever. Just like our natural ecosystems have seasons of sowing and harvest, our economies too have natural thrusts and withdrawals. And running from the truth only delays the withdrawals.
The longer our governments try to postpone an economic pull-back, the harder that pull-back will be. And the harder each pull-back, the larger the revolt we will see from the people. If Occupy Wall Street after the 2008 financial crisis is anything to go by, we’re in for quite the protest after the next recession.
The biggest protest the people can make, however, is this: Like the people of early Rome, they can simply stop using government money and move on to money made by the people: Bitcoin, the world’s hardest monetary alternative.
Look not at the price of Bitcoin in relation to the US dollar, for there you will see a volatile market of speculation. Rather, look to the new world Bitcoin offers, and get your fingers just a tad dirty. Buy a little. Hold on to it. And see what might just happen in the next two decades.
Here’s to the renovation of our prosperity.
Buy up to 20 different cryptocurrencies, and now gold and silver, directly with your South African Rand at www.altcointrader.co.za
* Relevant links:
https://bitcoinist.com/fighting-a-losing-battle-federal-reserve-prints-another-63-5b-this-week/
Share