A Brief History of Modern Money

[BobK71]

Great read, I enjoyed this article very much. I have a couple questions though:

1. Where bitcoin stands in this monetary war? It is electronic but is is not exactly under control of the elites (or so we think)

2. Will bitcoin be a danger to this future plan of wealthy elites to dominate in the currency war?
   What if they just take over it either by buying large amount of BTC or making it unpopular by claiming it is used by criminals etc. or push anticrypto law?

3. How bitcoin can be used to oppose this new era of financial repression?

Glad you liked it.

1. I'm not sure if you're old enough to remember Microsoft's strategy of 3 E's (embrace-extend-exterminate) against a competing technology.  This was what the elites tried to do with gold -- and unfortunately might do the same to Bitcoin.  We don't know if they have been buying Bitcoin to acquire price control one day -- I guess a consolation is that it would give a big one-time profit to Bitcoin holders when state(s) decided to use Bitcoin to stabilize their money.

2. IMO overt financial repression and manipulation tend not to work long-term.  The efforts at supporting the dollar after the elites were forced to abandon the gold peg in 1971 were messy and only served as stop-gaps to the early 90s when Chinese labor (at artificially suppressed wages by central bank policy) provided 15 years of stability.  So I think this option is low on the priority list.  The top global elites derive a good part of their power and wealth from the perception that they alone respect the market and that they allow people to get out of their assets freely.  This 'higher road' is more profitable as the deception is on a global scale.  (And they have the ideas to make it work -- e.g. the recently announced baby step by the Indian central bank to bring gold back into the system can actually serve as a template for an ingenious way of using gold to back money, but without owning as much gold or suffering as much embarrassment of devaluation as under the classical gold standard.)

Another sign they won't ban Bitcoin is that they just legitimized it.

3. Battle advantage will go back and forth between the elites and the public, but ultimately, the people (or at least educated people) must understand the problem.  It's going to be a multi-century struggle, but as soon as the public wake up, the problem will have nowhere to hide.

[BobK71]

Here's an afterthought on the future of modern money...

It's important to remember that the financial elite will do everything in its power to prevent a total collapse of the imperial monetary and asset bubble.  The reason is simple: if severe economic pain reaches the imperial center (say, a total collapse of confidence in the dollar via hyperinflation, etc.) the political elite will go after them.

When it becomes obvious to everyone that the system is totally broken, after the elites have been saying it is basically sound, the politicians will want both to push blame away from themselves and to confiscate the wealth of the bankers to help alleviate pain.  (Most likely, the bankers will have bought a lot of gold, silver and Bitcoin.)

This was what happened during the Spanish Inquisition.  Since then, for over 400 years, the financial elite have managed to avoid total hard landings by passing imperial power to the next country while the bubble was still holding.

Of course, prolonging the bubble in this way only means an even greater bubble, creating economic distortions and, ultimately, human misery on a greater scale.

[Yakamoto]

Most of this is essentially what I've read over the two years that I've been studying currency and the history and consequences of all of it. Started small, got manipulated quickly, and then here we are, with a bunch of worthless paper and a minimal amount of value actually maintained by our governments. It's a shame everything had to go downhill so quickly.

[OROBTC]

...

A new book worth taking a look at: The Road to Ruin (Jim Rickards), just out in the past few days.  He has written other books on modern money.  He is a very connected man.

I just finished it.  In short, he believes that The Elites are waging a War on Ca$h because they need to keep power and to keep spending money.  He suggests holding 5% - 10% of your investments in gold, the rest well-diversified.

[BobK71]

Most of this is essentially what I've read over the two years that I've been studying currency and the history and consequences of all of it. Started small, got manipulated quickly, and then here we are, with a bunch of worthless paper and a minimal amount of value actually maintained by our governments. It's a shame everything had to go downhill so quickly.

Nice.  The problem is the incentives faced by the elites.  While the system is stable, politicians receive 'free' political capital by issuing debt, and bankers (including the investment-bank shadow system) receive 'free' wealth by issuing their assets that are indirectly backed by state power.  "Stability breeds instability."

[streazight]

Bitcoin is great if you need to send money overseas or want to buy something online. There are hundreds of thousands of merchants that accept Bitcoin around the world, and because the fees are so low, you can often get great discounts when you choose to pay with Bitcoin instead of your credit card.

On modern age as the trend of new generation is toward online business and I think bitcoin is the only currency which can be more convenient to them as it does no need to transfer it in to other crypto currency, therefore to me bitcoin can be consider as the currency of the modern age.

[TheGodFather]

for me bitcoin has grow alot than i ever thought. it's so powerful because you can send and received money without any taxations or any fee bitcoin is bitcoin. that will never changed but the price will change for sure haha. hoping that it would make atleast 1k us dollar per bitcoin. if that happen i can make more investment in gambling sites bank roll for my profit to grow more. and maybe be rich someday hahaha 

[BobK71]

...

A new book worth taking a look at: The Road to Ruin (Jim Rickards), just out in the past few days.  He has written other books on modern money.  He is a very connected man.

I just finished it.  In short, he believes that The Elites are waging a War on Ca$h because they need to keep power and to keep spending money.  He suggests holding 5% - 10% of your investments in gold, the rest well-diversified.

Thanks.  I've read almost all his books but not this last one.

My views on the war on cash has changed somewhat recently.  I used to think of the cashless system and significant negative rates as the nuclear level of central bank weaponry, but if you think about it, truly negative rates will make the theft obvious to the average Joe, even if nothing of essence has changed.  (That is, most people don't understand that interest on 'safe' assets today is designed not to keep up with inflation -- and this is the only reason the system is tolerated.)  There's a good chance that the elites can explain all they want; people are just not going to stand seeing their bank balance evaporate just to 'encourage' loaning money to governments and banks.

So, my prediction is that, even in that world, the dreaded zero-lower-bound (by the elites, not by us!) will basically apply.

There are significant other benefits of a cashless world, for the elites.  Tracking of all transactions will make their financial market manipulation easier, but I think the main benefit will be the forced infusion of money into the banking system (since, of course, if cash is no longer an option, all your money has to be in your bank account.)

Cash under the mattress, whether owned by corrupt officials, drug dealers, or fearful citizens in a zero-interest world, is an under-appreciated enemy of the system today.  Its net effect is to draw quite a bit of money away from the banking system, money that can be put to work to pay the elites and to try to generate growth and inflation as per 'normal' system function.

In this view, abolishing cash would be a one-time benefit to the system, as big as that may be.  To keep the system alive, the elites would still have to find major avenues of growth or other major supports for their system (such as the postwar economic domination of the US after other rich countries had been bombed flat, or China's central bank deciding in the early 90s to use the country's labor pool as the new gold to back the dollar.)

[buwaytress]

Here's an afterthought on the future of modern money...

It's important to remember that the financial elite will do everything in its power to prevent a total collapse of the imperial monetary and asset bubble.  The reason is simple: if severe economic pain reaches the imperial center (say, a total collapse of confidence in the dollar via hyperinflation, etc.) the political elite will go after them.

When it becomes obvious to everyone that the system is totally broken, after the elites have been saying it is basically sound, the politicians will want both to push blame away from themselves and to confiscate the wealth of the bankers to help alleviate pain.  (Most likely, the bankers will have bought a lot of gold, silver and Bitcoin.)

This was what happened during the Spanish Inquisition.  Since then, for over 400 years, the financial elite have managed to avoid total hard landings by passing imperial power to the next country while the bubble was still holding.

Of course, prolonging the bubble in this way only means an even greater bubble, creating economic distortions and, ultimately, human misery on a greater scale.

Hello!

It's rare to find a well thought out piece conveyed in language that is neither too technical nor too wordy.

I have much to comment about but perhaps not worth fleshing out here. I will say a few things:

1. The "true" or "core" financial elite may be a tiny but powerful entity. On a wider scale, even a number of us could be considered financially more able than the vast majority of the public. You mentioned an educated public - I shall refer to this as the middle class, which we all surely are if only for our ability to discuss this here on this channel.

2. We all must realise by now that the system is indeed broken, but we are not willing to sacrifice for it to change. We want our piece of the pie, no matter how small, before it is all gone. And this is why, we knowingly want the bubble to prolong, knowing it is unlikely to burst in our lifetime.

It is sad, but it is real. And I must feel that this is true for most bitcoiners out here.

[Dahhi]

I have been reading the word "bubble" and I am thinking, if the elites have been able to print money out of thin air to meet up with flagrant lifestyles, what is going to happen in future to stop them from continuing the trend, what will make the "bubble" burst when the elites don't want it to burst?

[raven7886]

I have been reading the word "bubble" and I am thinking, if the elites have been able to print money out of thin air to meet up with flagrant lifestyles, what is going to happen in future to stop them from continuing the trend, what will make the "bubble" burst when the elites don't want it to burst?

The world bubble in financial world usually associated only with investments, but now a days we are seeing it is also being used for currencies and that must be a new innovative achievement of modern money and its system.

In my opinion bitcoin must be a origin point of modern money, from here we are going to enjoy the revolution of same traditional financial system but in complete modern more precisely in digitized mode.

[stark101]

From the past years,  there was a global fixed exchange rate. Currencies were linked to gold, meaning that the value of a local currency was fixed at a set exchange rate to gold ounces. This was known as the gold standard. But later on, governments used fiat currency as the basis of the monetary system where it was the non-convertibility and the flexible exchange rates.

[coinplus]

I have been reading the word "bubble" and I am thinking, if the elites have been able to print money out of thin air to meet up with flagrant lifestyles, what is going to happen in future to stop them from continuing the trend, what will make the "bubble" burst when the elites don't want it to burst?

The world bubble in financial world usually associated only with investments, but now a days we are seeing it is also being used for currencies and that must be a new innovative achievement of modern money and its system.

In my opinion bitcoin must be a origin point of modern money, from here we are going to enjoy the revolution of same traditional financial system but in complete modern more precisely in digitized mode.

Yes a modern money most probably will be in digital format and that certainly will be bitcoin as per my predictions. Because I do not see any intensive competitor for bitcoin by any means. A modern money must be a demand of this generation who are living just with one mobile phone. I strongly believe bitcoin will answer all modern requirements.

[BobK71]

Hello!

It's rare to find a well thought out piece conveyed in language that is neither too technical nor too wordy.

I have much to comment about but perhaps not worth fleshing out here. I will say a few things:

1. The "true" or "core" financial elite may be a tiny but powerful entity. On a wider scale, even a number of us could be considered financially more able than the vast majority of the public. You mentioned an educated public - I shall refer to this as the middle class, which we all surely are if only for our ability to discuss this here on this channel.

2. We all must realise by now that the system is indeed broken, but we are not willing to sacrifice for it to change. We want our piece of the pie, no matter how small, before it is all gone. And this is why, we knowingly want the bubble to prolong, knowing it is unlikely to burst in our lifetime.

It is sad, but it is real. And I must feel that this is true for most bitcoiners out here.

Thanks for bringing up these great points.

It's absolutely true that a good part of the imperial financial system's support comes from parceling out the benefits widely and proportionately.  In a real sense, every citizen of the West, no matter how poor, is a major beneficiary who receives 'free' wealth from the rest of the world, since their government is able to issue paper wealth in exchange for real goods and services from the developing world.

We also have to remember that the problem goes beyond theft.  There have been major episodes of conflict and suffering every time the bubble becomes unstable (which, BTW, it always seems to become, because of the incentives for the elites to destabilize their own system.)

In the early 1890s the Bank of England itself had to be bailed out by foreign central banks.  Soon we saw massive military build-ups and sabre rattling for no apparent reason, and 'stability' didn't return until the US took over the bubble after the Great War.

The early 1930s' bank collapses would eventually lead to the Great Depression and World War II.

The late 1960's near-collapse of the dollar-gold system would lead to social and political upheavals around the world.  This time, the conflicts were more dispersed and less horrifying, since the imperial authorities saw fit, for the first time, to (effectively) devalue paper assets against gold massively, thus wiping out a good part of debt via inflation.  Stability didn't really return until W. Europe was forced to inflate and China made its labor pool a major support for the system.

This last bout of instability, starting in the late 2000s, has yet to play out, but we've already seen profound financial trouble in Europe and China, and much suffering in the Middle East.

I agree with you that it's not an easy problem to solve.  Most of us here, not just the elites, are addicted to the system, to one degree or another.  But surely the first step to recovery must be to realize the unsustainable nature of the addiction.  The next step will be to summon enough courage to change.

[Przemax]

Everything ok, but the op just mentions the war and the usury and not make it the central point of imperial mechanics. That history of an unstustainable economies that are based on the debt are  dated way back into the ancient Babylon.

The only reason we had not seen such a cases more often because of most of the countries were inflating their economies if they were using the usury, and hence the fall effect were less visible, or they were succesful in wars, or they banned the usury. If such an empire wouldnt do every such a cases succesfully it will fall, because empires are  always on the down spiral once they arrive.

 Inflation is the effect not the cause of colapsing economies. Its the dry out of money and accumulation of wealth is the cause. Judging by the drying out of bitcoin and its vast accumulation by few people its only reflects the reality of the world we live in, and as we see with bitcoin - bitcoins stays the same, as the rest of the falling economies. It looks good on paper, its worse when peoples lives depends on it.

[rajasumi3]

Bitcoin is the near future and maybe we are living in this future .there is always better with bitcoins as during international transaction bitcoin miner fees is less well in case of other credit cards the amount is too high .

[X-ray]

Bitcoin is the near future and maybe we are living in this future .there is always better with bitcoins as during international transaction bitcoin miner fees is less well in case of other credit cards the amount is too high .

we're already living in the future and there's only more advanced future ahead. credit cards charge around more than 1$ for each transaction and bitcoin about few cents that's right though people sometimes didn't mind to pay the fees as high as credit card offered rather then spending time for exchanging and it might be a hard competition for bitcoin

[bncbnc]

Bitcoin is the near future and maybe we are living in this future .there is always better with bitcoins as during international transaction bitcoin miner fees is less well in case of other credit cards the amount is too high .

yes it is a fact bitcoin is the currency of the future because most people are accepting bitcoin and making it more stronger from its previous position, and not only in some area but in all over the world. hope that very soon people will start using bitcoin as a currency when many services will be available in your local markets.

[BobK71]

Everything ok, but the op just mentions the war and the usury and not make it the central point of imperial mechanics. That history of an unstustainable economies that are based on the debt are  dated way back into the ancient Babylon.

The only reason we had not seen such a cases more often because of most of the countries were inflating their economies if they were using the usury, and hence the fall effect were less visible, or they were succesful in wars, or they banned the usury. If such an empire wouldnt do every such a cases succesfully it will fall, because empires are  always on the down spiral once they arrive.

 Inflation is the effect not the cause of colapsing economies. Its the dry out of money and accumulation of wealth is the cause. Judging by the drying out of bitcoin and its vast accumulation by few people its only reflects the reality of the world we live in, and as we see with bitcoin - bitcoins stays the same, as the rest of the falling economies. It looks good on paper, its worse when peoples lives depends on it.

Usury by itself won't necessarily cause collapse.  The real problem is state control of money, which encourages debt to grow, which then forces the empire either to inflate or to subjugate other countries, as you state.

Without state control of money, debt would only occur when the investment looks good enough (on economic grounds) to repay both principle and interest in future.  That was why credit was so tight under hard money during the Renaissance.  But the Renaissance still had very good growth driven purely by technical progress.  If the supply of money is constant while the real economy grows, there will be a natural, gentle and beneficial deflation over the long term.  Interest, generated by the small amount of total debt, will only re-distribute some wealth towards those who invest wisely.

[BobK71]

I have been reading the word "bubble" and I am thinking, if the elites have been able to print money out of thin air to meet up with flagrant lifestyles, what is going to happen in future to stop them from continuing the trend, what will make the "bubble" burst when the elites don't want it to burst?

That is a very good question.  I hope I will have more time and respond (again) in more detail, but the short answer is that the global imperial system depends critically on the trust in the assets they issue, including money.  They don't have enough power to force people worldwide to accept their money.  In the global system, the only reason one single country can stay on top of the world is to use a combination of hard and soft power, and the soft power comes mostly from savers trusting in the purchasing power of the country's money.  (This is why the Fed is so eager to raise rates at this point, if it can.)