The Bitcoin Standard: The Decentralized Alternative to Central Banking

because money is the market good with the least diminishing marginal utility.

This is a historical lesson of immense significance, and should be kept in mind by anyone who thinks his refusal of Bitcoin means he doesn't have to deal with it. History shows it is not​ possible to insulate yourself from the consequences of others holding money that is harder than yours.

its mere existence is an insurance policy that will remind governments that the last object the establishment could control, namely, the currency, is no longer their monopoly. This gives us, the crowd, an insurance policy against an Orwellian future.

money that is easy to produce is no money at all, and easy money does not make a society richer; on the contrary, it makes it poorer by placing all its hard‐earned wealth for sale in exchange for something easy to produce.

Capitalism is what happens when people drop their time preference, defer immediate gratification, and invest in the future. Debt‐fueled mass consumption is as much a normal part of capitalism as asphyxiation is a normal part of respiration.

While microeconomics has focused on transactions between individuals, and macroeconomics on the role of government in the economy, the reality is that the most important economic decisions to any individual's well-being are the ones they conduct in their trade-offs with their future self.

According to Cantillon, the beneficiaries from the expansionof the money supply are the first recipients of the new money, who are able to spend it before it hascaused prices to rise. Whoever receives it from them is then able to spend it facing a small increase in theprice level. As the money is spent more, the price level rises, until the later recipients suffer a reductionin their real purchasing power. This is the best explanation for why inflation hurts the poorest and helpsthe richest in the modern economy.

History has shown that governments will inevitably succumb to the temptation of inflating the money supply.

The total U.S. M2 measure of the money supply in 1971 was around $600 billion, while today it is in excess of $12 trillion, growing at an average annual rate of 6.7%.

Civilization is not about more capital accumulation per se; rather, it is about what capital accumulation allows humans to achieve, the flourishing and freedom to seek higher meaning in life when their base needs are met and most pressing dangers averted.

A good that assumes the role of a widely accepted medium of exchange is called money.

Sound money is also an essential element of a free society as it provides for an effective bulwark against despotic government.

Sound money allows people to think about the long term and to save and invest more for the future. Saving and investing for the long run are the key to capital accumulation and the advance of human civilization.

But money's marginal utility declines far slower than any other good, because it declines along with the utility of wanting any good, not one particular good.

Hyperinflation is a form of economic disaster unique to government money. There was never an example of hyperinflation with economies that operated a gold or silver standard, and even when artifact money like seashells and beads lost its monetary role over time, it usually lost it slowly, with replacements taking over more and more of the purchasing power of the outgoing money.

The denarius was the silver coin that traded at the time of the Roman Republic, containing 3.9 grams of silver, while gold became the most valuable money in the civilized areas of the world at the time and gold coins were becoming more widespread. Julius Caesar, the last dictator of the Roman Republic, created the aureus coin, which contained around 8 grams of gold and was widely accepted across Europe and the Mediterranean, increasing the scope of trade and specialization in the Old World. Economic stability reigned for seventy-five years, even through the political upheaval of his assassination, which saw the Republic transformed into an Empire under his chosen successor, Augustus. This continued until the reign of the infamous emperor Nero, who was the first to engage in the Roman habit of “coin clipping,” wherein the Emperor would collect the coins of the population and mint them into newer coins with less gold or silver content.

The United States summoned representatives of its allies to Bretton Woods in New Hampshire to discuss formulating a new global trading system. History has not been very kind to the architects of this system. Britain's representative was none other than John Maynard Keynes, whose economic teachings were to be wrecked on the shores of reality in the decades following the war, while America's representative, Harry Dexter White, would later be uncovered as a Communist who was in contact with the Soviet regime for many years.

Nero, who ruled from 54–68 AD, had found the formula to solve this, which was highly similar to Keynes's solution to Britain's and the U.S.'s problems after World War I: devaluing the currency would at once reduce the real wages of workers, reduce the burden of the government in subsidizing staples, and provide increased money for financing other government expenditure. The aureus coin was reduced from 8 to 7.2 grams, while the denarius's silver content was reduced from 3.9 to 3.41g. This provided some temporary relief, but had set in motion the highly destructive self-reinforcing cycle of popular anger, price controls, coin debasement, and price rises, following one another with the predictable regularity of the four seasons.

a money that is easy to produce is no money at all, and easy money does not make a society richer; on the contrary, it makes it poorer by placing all its hard-earned wealth for sale in exchange for something easy to produce.

As with Rome, the fall of Constantinople happened only after its rulers had started devaluing the currency, a process that historians believe began in the reign of Constantine IX Monomachos (1042–1055).8 Along with monetary decline came the fiscal, military, cultural, and spiritual decline of the Empire, as it trudged on with increasing crises until it was overtaken by the Ottomans in 1453.

It was in the city-states that humans could live with the freedom to work, produce, trade, and flourish, and that was to a large extent the result of these city-states adopting a sound monetary standard. It all began in Florence in 1252, when the city minted the florin, the first major European sound coinage since Julius Caesar's aureus. Florence's rise made it the commercial center of Europe, with its florin becoming the prime European medium of exchange, allowing its banks to flourish across the entire continent. Venice was the first to follow Florence's example with its minting of the ducat, of the same specifications as the florin, in 1270, and by the end of the fourteenth century more than 150 European cities and states had minted coins of the same specifications as the florin, allowing their citizens the dignity and freedom to accumulate wealth and trade with a sound money that was highly salable across time and space, and divided into small coins, allowing for easy divisibility.

But a government which raises taxes to fund a monarch's lavish lifestyle will engender mass resentment among his population, endangering the legitimacy of his rule and making it ever more precarious.

In retrospect, the major difference between World War I and the previous limited wars was neither geopolitical nor strategic, but rather, it was monetary. When governments were on a gold standard, they had direct control of large vaults of gold while their people were dealing with paper receipts of this gold. The ease with which a government could issue more paper currency was too tempting in the heat of the conflict, and far easier than demanding taxation from the citizens. Within a few weeks of the war starting, all major belligerents had suspended gold convertibility, effectively going off the gold standard and putting their population on a fiat standard, wherein the money they used was government-issued paper that was not redeemable for gold.

It is the author's opinion that the history of China and India, and their failure to catch up to the West during the twentieth century, is inextricably linked to this massive destruction of wealth and capital brought about by the demonetization of the monetary metal these countries utilized.

You do not get a job or funding in this system by producing important scholarship that is productive and useful to the real world, but by furthering the agenda of the funders.

For as long as the government could print more money and have that money accepted by its citizens and foreigners, it could keep financing the war.

The well-known phenomenon of the modern breakdown of the family cannot be understood without recognizing the role of unsound money allowing the state to appropriate many of the essential roles that the family has played for millennia, and reducing the incentive of all members of a family to invest in long-term familial relations.

As H. L. Mencken put it: “Every election is an advanced auction on stolen goods.

The average savings rate of the seven largest advanced economies12 was 12.66% in 1970, but has dropped to 3.39% in 2015, a fall of almost three-quarters.

Observing prices of agricultural commodities in the Roman empire in terms of grams of gold shows they bear remarkable similarity to prices today. Examining Diocletian's edict5 of prices from 301 AD and converting gold prices to their modern-day U.S. dollar equivalent, we find that a pound of beef cost around $4.50, while a pint of beer cost around $2, a pint of wine around $13 for high quality wine and $9 for lower quality, and a pint of olive oil cost around $20.