Rebirth of Reason


Monopoly Money's End: Distributed Digital Currencies
by Dean Michael Gores

Monopoly Money's End: Distributed Digital Currencies
by Dean Michael Gores

Here I explain why the US dollar has market value. Then I reveal how it is used to steal wealth from producers, traders, and savers. In final I describe how monetary enslavement will be abolished: with distributed digital currencies.

The Source of US Dollar Market Value

The US dollar is not "backed by debt". That is nonsense. The US dollar is a government enforced monopoly fiat money. People in the US, and by international trade... are actually forced to use US dollars for trade. Historically since 1933 if a US person tried to use gold as money or make a bank, the Federal Government would confiscate the gold and effectively destroy the private competing bank. Since 1971 the US has not let other countries trade in anything but the US dollar... except that's coming to an end now... countries like China are carefully slowly increasing agreements to trade in other currencies.

What the US dollar is backed by is the effective slave labor of the US people and even foreign countries too. In order for us as individuals to benefit from specialization & trade, we have to use the US dollar. Without the US dollar monopoly enforcement, many people would chose to save, trade, and bank with a currency that is more limited in supply like gold/silver. So since we are forced to use the dollar, and specialization & trade increase our goal attainment despite the dollar monopoly, we do specialized work, and we trade, and we use the dollar as money. Its each person's willingness to accept a certain number of dollars in exchange for products & services that is the root of the value of the US dollar... combined with that the US dollar is a government enforced monopoly and that even still specialization & trade are worthwhile.

Given that:
A. Greater specialization and trade enable a person to increase their personal ownership of life sustaining resources.
B. Different kinds of trade enable greater specialization:
1. Barter: Lowest specialization, trades must be local and its hard to match & optimize market trade values
2. Physically trading a common money (like gold) between locals: Medium specialization, market value of goods & services can be better established to enable more optimized production (for the most valued things) and trade (for things of more equal market value).
3. Bank deposits & paper/electronic communication to transfer account balance: Maximum specialization: if the bank is trusted and confirms transactions, people can then make long distance and long time span contracts to pay/deliver.

The US dollar monopoly is enforced at the 2nd level above. Given that the monopoly is enforced, if the US dollar inflates too fast, then the benefits of greater specialization and trade will be offset by the losses due to inflation... and then people will revert back to bartering. Whatever the Federal Reserve claims its purpose is, its TRUE purpose is to maximize inflation (money that they don't have to work for to use), while trying not to inflate to such an extent that people revert back to barter and foreign countries don't actually fight a war against the strongest military power in the world in order to trade with something else.

The Methods by Which the Federal Government, Federal Reserve, and Banks Steal Wealth

The purpose of US government debt and bank debt... is not quite like many describe. Its only purpose is to make things so complicated that most people aren't able to comprehend what's going on, who is benefiting, and who is getting screwed. It would be simpler if they just outright printed money. Borrowing/debt when you know you are going to print money later to pay for the debt/bail yourself out just delays the money printing... but its a different and more complicated means (way) to the same ends (goal).

The Federal Government/government people like to spend lots of money, even if the government goes into debt, because they personally/individually control how the money is spent... and they can personally benefit in many ways by spending more, even though it ends up screwing a lot of people who don't want their tax money and savings (inflation spending steals savings) spent that way. Government workers don't have to earn the resources they spend via production & trade in the free market. Government funds in today's US government are instead of voluntarily earned, they are collected by domination of geological area, then through taxation and inflation. So government workers control how resources are spent... even though they don't work to create the resources they spend, they take resources they spend from whatever kind of people are the current victim of the government's control/oppression.

Today's victims are in general the people who produce, trade, and save resources in order to provide for themselves and their families. The Federal Government keeps the majority of voting poor people happy by not taxing such people much, and also sharing some of the dibs via various wealth redistribution programs. Furthermore the benefits go to the Federal elites who like to control even if it means they must manipulate, who understand the system and try to get the top, and figure out various ways to pander, mislead, misguide, and other manipulations in order to sway popular unreasoned opinion. They get to the top of the Federal Government/Reserve & Banks, and they siphon off considerable wealth towards their interests.

The Federal Government and Federal Reserve exist as they do through majority vote. There are more people who chose to redistribute wealth from producers/traders/savers than there are people who provide for themselves. The producers don't defend themselves... they for the most part have either accepted that popular vote is best even if they are stolen from, or they believe that they have a duty to take care of others needs and they would feel guilty if they didn't pay taxes. And very few producers know all of this... most of them are simple minded slaves to the elite and majority of parasites.

People who “work” for (government protected US dollar monopoly) banks like to give out way more loans than savers are willing to give out... effectively operating at loss which eventually leads to bankruptcy/default/bailout. But they don't care if they default... because they are protected by the government... they just give out the loans so that during the time they are operating they facilitate a lot of transactions and loans, which individually as bankers they can appear to be legitimate/honest business men who are just being paid to facilitate transactions and loans... when really they are stealing saver's resources, they are actually government protected thieves. The more transactions and loans they can get people to do with them, the more they can appear to legitimately get paid.

So that in a nutshell is actually what the US dollar is and who benefits and who gets screwed. Oh by the way, in 1933 the Feds stole all US citizen bank deposited gold. In 1971 the Feds stole international bank deposited gold. And since 1971 they've been secretly selling that stolen gold to make the gold price volatile and depressed, so on top of stealing gold from people who try to make gold backed private banks, now they also destroy gold's appearance as a stable rare currency. Despite their disingenuous misdirections about the importance of gold as money, they do everything they can in order to manipulate the gold price down, which prevents simple minded people from demanding that they be able to use gold instead of the US dollar monopoly money. But I think they are running out of gold now. China and India are buying it up, emptying their vaults, causing the reserve ratio of paper gold markets to go way up... and when those markets default... we will know they have run out of gold. The Emperor has no cloths.

The Abolishment of Monetary Enslavement

I don't think productive people will band together to defend private banks and overthrow the US dollar monopoly. There is the majority of parasites who enjoy the fruits of the US dollar monopoly enforcement... and the elites who control the US dollar monopoly and manipulate slaves into thinking the slaves should defend the US dollar too. The parasites are too powerful.

Just like Ayn Rand's technological inventions that enabled people to live in Galt's Gulch, I believe that new technology will be the tool to abolish monetary enslavement. The technology is called distributed digital currency, but its much more than just a “currency”. It functions as a bank too, but without the counter party risk. Such a technology works as follows:
- Supply of value is limited by a per-established algorithm and verified by individuals using the system. You can try to get people to accept coins that were generated by a different algorithm... but no one would accept a coin unless it was generated by the exact algorithm that is specified at the ledger's inception.
- Public key cryptography protects account's values
- Transfers of value are only accepted via proof of digital signature
- Double spends are prevented via using a single transaction stream that is established by going with the incremental ledger changes made by individuals who finds an input that is a verifiable solution to extremely difficult computational algorithm.
- The difficult of the computational algorithm also has the feature of algorithmically adapting to technological performance advances in order to maintain a constant rate solutions are found.

The first implementation of such a technology is called Bitcoin. A paper was released in 2008 describing such a system. In 2009 it was released to the public. In Bitcoin, eventually a 21 million highly divisible coins will be generated via using its mathematical algorithm. Today a full bitcoin is worth $244 and 11,944,675 bitcoins have been generated. Market capitalization = $2,914,500,700.

Compared to using coined gold and gold backed banks, distributed currency technology is extremely resilient verses Federal Government (or any thieves who like to steal gold from individuals and banks). It also is more efficient in transferring wealth than traditional banks: no armored cars are needed to balance between private bank buildings. Its secure against counter party risk: there isn't any banker you have to trust won't spend all the money foolishly and then default on your claim of deposit.

The Federal Government would have to spend vast resources performing the proof of work algorithm in order to prevent transactions or make double spends. Maybe another strategy is to scare the general populous into thinking bitcoins are used for crime, and hence they may try to outlaw it. Or maybe they will outright declare that it prevents them from profiting from inflating the money supply themselves, and try to outlaw it in that way. Either way, such actions by the government will hamper larger businesses (economies of scale) from using distributed digital currencies. But... they will not be able to shut the internet down, and hence they will not be able to shut Bitcoin down. People will use it, and countries that allow it will have extremely successful savers, and producers will flock to such countries.

Concluding Summary

The US dollar is a government enforced monopoly on money. It is valuable due to benefits of specialization of labor and trade, and the efficiency gains in trading with dollars verses bartering. The Federal Government, Federal Reserve, and Banks use various schemes of printing dollars and deficit spending in order to steal wealth from producers, traders, and savers. Distributed digital currencies are a new technology that is invulnerable to government confiscation which may enable people to break off the chains of monetary enslavement.
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