US Founding Fathers Would Make Bitcoin Primary Legal Tender
Juan Villaverde is an econometrician and mathematician devoted to the analysis of cryptocurrencies since 2012. He leads the Weiss Ratings team of analysts and computer programmers who created Weiss cryptocurrency ratings.
Dr. Bruce Ng is an educator in the field of Distributed Ledger Technology (DLT) and has been a lead crypto-tech analyst for Weiss Cryptocurrency Ratings since shortly after their launch.
I could hardly believe my eyes when I saw this headline: Fed’s New Facility Will Buy Junk Bonds With 7-1 Leverage. Apparently, it wasn’t enough for the Federal Reserve merely to skirt the law by pouring freshly printed money into junk bond exchange-traded funds (ETFs).
Now they intend to just scoop ’em up by the wheel-barrow load — directly.
We are fast becoming a world where a fake USD 20 bill can get you killed. (Remember, the chain of events that led to the murder of George Floyd — and nation-wide riots — began when a convenience store clerk refused a suspicious USD 20 banknote he tried to buy cigarettes with.)
Yet, when 20 people meet behind closed doors in the Federal Reserve’s marble-columned building (in Foggy Bottom, Wash.) and dole out trillions of freshly printed dollars to politically well-connected companies … we call that “monetary policy.”
Words cannot describe how morally depraved this is.
As chaos and riots sweep across the nation, the Fed is pumping more and more freshly printed money into big, badly managed corporations. (It reminds us of Emperor Nero singing and playing his lyre while Rome burned to the ground around him!)
At last count, nearly 46 million Americans have filed for unemployment benefits in just three months. Tens of thousands of businesses closed their doors, many of them forever.
But if you’re a giant corporation … with an army of lobbyists … you get all kinds of money thrown your way. The Fed says this must be done, because of a “liquidity” crisis.
Give me a break! Do words no longer have any meaning? What deadbeat company cannot claim to have a “temporary liquidity crisis.”
Not only is this monetary policy ridiculous … It’s fundamentally UNFAIR.
In a truly free market, collective buying and selling decisions of the masses dictate which businesses thrive and which go under — not a bunch of unelected central bank bureaucrats.
Buying the debt of big, politically-connected companies (that would be insolvent if not for endless bailouts) does not create new jobs. Nor does it generate the billions in earnings lost to pandemic lockdowns.
All this does is create zombie companies and a permanent underclass — of folks the political bosses in Washington consider unworthy to feast at Fed’s trough of trillions.
Some say only gold can restore honest money. They’re wrong!
We’ve been down this road before. A century ago, every paper dollar issued in the United States was redeemable on demand for gold (or silver). But the politicians eventually found a way to scrap the gold standard.
And if they did it once, they can surely do it again. That leaves cryptocurrencies as the only honest alternative to the morally bankrupt monetary system we have today.
And that’s because cryptoassets like bitcoin (BTC) aren’t centrally controlled.
You may have heard it said that “miners” mint new supplies of Bitcoin. But miners are by and large just regular people like you and me.
Bitcoin miners don’t set monetary policy. That’s up to the ENTIRE community of people who use Bitcoin.
This is why it’s so damn hard to change even the tiniest detail of how Bitcoin operates. The overwhelming majority of users must agree. Or nothing happens.
Compare that to how we set monetary policy. Would an overwhelming majority of US dollar users have agreed to the Fed bailing out failing companies in 2008 — while letting millions of homeowners get foreclosed on?
Would they have voted to pour trillions into big, badly run companies — while 47 million ordinary Americans, who lost their jobs to pandemic panic, got left holding the bag?
Sadly, nothing about our monetary system reflects the will of the majority. Or even benefits the majority, in the long run.
This is key, because it’s the utter absence of democracy in the monetary system that ultimately does the most damage to Western economies.
The Framers of the American Constitution wrote:
“No state shall … coin money, emit bills of credit, make anything but gold and silver a tender in payment of debts …”
They did not write this because they were gold bugs. Or lovers of precious metals. It’s just that they had no rose-colored illusions about human nature.
They understood giving any person or group central control over money would eventually doom the Republic. And back then, gold and silver were the only non-centrally controlled money available.
But what if America’s constitutional convention were held today? It’s very likely that the Founding Fathers would also make bitcoin — and perhaps a few other cryptos — primary legal tender.
This is why bitcoin (and other cryptoassets) are going to be the future of money. Central banks are now destroying the world’s major paper currencies — and no power on earth can stop them.
And to make big money as an investor, you absolutely have to be on the right side of history.