Gold to Fiat to Bitcoin

 

Gold mining significantly alters the environment causing deforestation and other impacts, particularly in aquatic systems with residual cyanide or mercury.

Children work in unstable 25-meter-deep pits that could collapse at any moment. They mine gold underwater, along the shore, or in rivers, with oxygen tubes in their mouths. They also process gold with mercury, a toxic metal, risking irreversible health damage from mercury poisoning.

Mining gold uses about 0.27% of world wide oil consumption.
The figure below shows the amount of gold mined.

The figure below shows the price of gold. 

To pay for the war in Vietnam, President Nixon needed to print more money than there was gold to back it up and there was no gold left to confiscate. He convinced the world banks to adopt a new fiat dollar, no longer based on gold to become the world reserve instead of gold. America was able to do this by agreeing with oil producing countries to develop and protect their oil fields as long as oil traded only for dollars.

When president Clinton allowed banks to speculate, banks saw this as a new way of acquiring profits. As the government had laws to protect the savings of people, the banks had nothing to lose, so they speculated. When governments lowered taxes to encourage corporations to grow, the CEOs instead used this money to buy back their stock to increase their value for the benefit of the shareholders and their bonuses.

A new monetary theory was proposed and adopted where money was created debt-free by the government. It issued as much as it needed and distributed it directly to the public interest free. Taxes were used to control the money in circulation to control inflation.

The purchasing power of the dollar continued to drop.

Bitcoin to the rescue. 

As the dollar was losing it value, it was seeking a safe haven free of the manipulations of governments and their bankers with unlimited amount of fiat money. Gold was mined at a rate that was much more predictable. Much of the capital went into gold, a storage of wealth for millennia. 

The risks of storing, transporting and having gold confiscated were solved by creating a digital version of gold called Bitcoin that could not be confiscated.  The idea of an internet money free of borders, governments and banks was timely and well thought out. It was basically simple, open source and totally decentralized with no center of control to shut down or compromise. 

Using  state of the art cryptography and the full power of the internet, the Bitcoin network was developed by geeks who were convinced of Bitcoins promise to revolutionize world economy and return it to the people. The network caught the attention of entrepreneurs who were convinced to build on top of it. They made Bitcoin so user friendly, that investors started to open up exchanges so that people could buy the Bitcoins from the miners. 

The exchanges were so user friendly that professionals and corporations began to invest in Bitcoins. This allowed geek programmers mining Bitcoin from home with their computers to replace gold miners, many of them children, working  in dangerous conditions. The value of Bitcoin rose so rapidly that the geek miners were soon overtaken by warehouses of computers called Bitcoin mining farms.

Bitcoin uses about 0.07% of world wide electricity capacity, a very small fraction of what the mining industry uses, and a fraction of the electricity used to run the financial industry. 

The figure below shows the amount of Bitcoins available to be issued.

The figure below shows the price of Bitcoins up to 2020.

 

The figure below shows the predicted price of Bitcoin.

Inflation proof:

Saving in fiat currencies, especially at zero interest rates, is seeing the buying power of your saved money slowly weaken by inflation as more and more money is issued into the economy to try and save it. This is much like trying to keep a leaky bucket full. 

The rate of Bitcoins issued is fixed and limited to 21 million. Most of the Bitcoins have already been issued to relatively few people who are using Bitcoins as a way of saving. Their interest is to raise the price of Bitcoin and if they manipulate the price, it will be to raise it. This make saving Bitcoins as a safe way to save wealth, either for short term private investments or long term investments for your children and grand children.  

Can not be seized:

While gold, property, houses, and bank accounts can be seized, as long as you or your inheritors have your key, your Bitcoins are secure from loss, theft, or seizure. .

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https://andrewvecseybooks.blogspot.com/

  

Bitcoin and the fall of banks

 

Banks, lenders of money, rose in prominence many thousands of years before Jesus overturned their tables. Banks rose like weeds wherever people needed money to trade. 

When development grew as the immigrants to America overtook the continent, rich people saw the opportunity to become banks. With enough investors and stock holders, they printed their money backed by gold they stored and with the promise of redeeming the money for gold at any time. 

They lent out their money to governments, farmers, business men and home buyers at an interest to be profitable. They became very powerful. 

When President Lincoln proposed that the government print their own money to pay for the civil war, rather than borrow it from the banks, he was assassinated. The private banks led by the richest people got so powerful and so greedy that they printed more money than they had gold. 

When people started to redeem their gold, the banks were forced into bankruptcy and many people lost their wealth. 

To save the situation from escalating, the richest of the bankers formed a union and convinced the politicians to accept a radical change in bank regulation to prevent any more run on banks and bankruptcies and disruptions to the national economy. This union became the bank of all private banks. Instead of private banks issuing their own money, the FED as it became to be called issued one money for the entire nation called the dollar based on gold. They would lend it to the private banks at an interest rate so that the private banks could make a profit by lending it to the people at a higher interest rate. The more profitable a private bank was, the more it could borrow from the FED. This union of banks was just what the politicians needed to make a big profit from the inevitable war that was brewing in Europe and the rest of the world.

The FED became the national bank to finance the war.

After the war, America celebrated for a decade. Using the stock markets, the Americans gambled and lost all they had and suffered a decade of severe depression. 

To placate the suffering people and save them from overthrowing capitalism with communism, President Roosevelt enacted expensive social measures. 

To print money to pay for the social measures, all privately held gold was confiscated. This lasted for 40 years. Like from WWI, 20 years earlier, the banks profited greatly by WWII.

In 1963 President Kennedy signed executive order #11110 which restored the U.S. Government's authority to issue currency without the Federal Reserve. President Kennedy was assassinated 90 days after signing this executive order and the executive order was never carried out. 

To pay for the war in Vietnam, President Nixon needed to print more money than there was gold to back it up and there was no gold left to confiscate. He convinced the world banks to adopt a new fiat dollar, no longer based on gold to become the world reserve instead of gold. America was able to do this by agreeing with oil producing countries to develop and protect their oil fields as long as oil traded only for dollars.

Banks were forbidden to speculate with money. They could only lend it out and distribute it to where it was most needed and most profitable. When president Clinton allowed banks to speculate, banks saw this as a new way of acquiring profits. As the government had laws to protect the savings of people, the banks had nothing to lose, so they speculated. When governments lowered taxes to encourage corporations to grow, the CEOs instead used this money to buy back their stock to increase their value for the benefit of the shareholders and their bonuses. 

Banks play a vital role in distributing money in both socialist and capitalist societies.

The communist countries led by Russia and China adopted capitalism. Their governments allow capitalistic corporations to thrive, but they control and regulated them for maximal profits. They do this for the long term benefit of the entire country at the expense of individual rights and freedoms. The people gladly trade their freedoms for security. 

The reason that socialism fails is that it promotes collectivism over individualism. People are inherently individualistic. They sacrifice everything for themselves and their children. This drives incentive to improve and excel and share knowledge and expertise for a healthy profit which leads to capitalism. The reason that socialism does not work is because people lose incentive to be productive when they do not individually gain by making a profit. Those in power cling on to their power and become corrupt. They must be changed regularly by informed people free to vote them into office and out of office.

The capitalist countries led by Europe and US adopted socialism. Their governments are controlled by corporations that thrive because of their short term self interests putting profit over over long term interests of the nation. To appease the discontented population, capitalist governments adopt socialistic programs that greatly reduce individual freedoms. The people gladly trade their freedoms for security.  

The reason that capitalism does not work is not because of the greed of capitalists, but because capitalism requires a market where people are free to make rational choices. With fear propaganda and brainwashing, people are irrational. They unknowingly allow themselves to be enslaved and become incapable of making rational choices. They falsely believe that they are free because they are free to choose one of 2 men to lead them, and so many consumer products to choose from. 

US with its control of the dollar is the main consumer in the world. They pay for everything they consume in dollars. The main producer is China.

As the world business uses dollars, China is happy to have as many dollars as it can have. It lends back dollars it gets from American consumers just to keep them consuming. It lends its dollars to finance its global projects in strategic locations. The countries that borrow dollars from China and that have to pay back those dollars at an interest slowly fall into a dollar debt where they are short on dollars. This dollar shortage drives up the price of the dollar. As the dollar is the world reserve currency, nobody complains when US dollars get printed. As their own currencies are tied to the dollar, they just print more of their own currencies to keep up. 

China prints as much of its currency as it needs to keep its economy growing. China understands that the US must print as many dollars as it takes to bail out failed corporations that are needed for the health of its nation so that it keeps consuming products from China.

The corona 2020 pandemic hit US like it found itself in a sudden world war. But instead of producing weapons, people were on lock downs quarantined at home. Schools closed and small business were taken over by global corporations.

The FED issued free money to the banks at 0% interest in an effort to motivate them to lend it out to the people. The banks use this money to speculate and increase their share price instead of lending it out and risk losing it.

The government realized that the only way to revive the economy and get money to the people where it is needed is to totally revamp the banking system. It proposed changing the debt based economy to a debt free based economy. The FED stopped lending money that it created from thin air. It converted all bank accounts into digital wallet apps and issued money directly to the accounts. It replaced all cash by the digital dollar. This new new monetary theory of economics called MMT was hailed as the solution to the failing economies.

Instead of using taxation and borrowing for its needs, the government issued debt free money at 0% interest rates to the economy to fund social and public programs, as well as to finance private corporations, small businesses and provide mortgages. The government used taxation as a way to control inflation. This was what China was doing.

The dollar was the world reserve currency, and America was using it under the threat of sanctions to maintain its world influence. Many countries began to use gold and its digital version, Bitcoin to free themselves from the constraints that the dollar presented. This move drastically raised the price of Bitcoin as well as its global adaptation. When the dollar faltered and began to lose its value, other nations, corporations and the people stated to move their reserves and savings into gold and Bitcoin. 

When governments started to confiscate gold, Bitcoin became the only safe haven as it could not be confiscated. When governments outlawed the use of Bitcoin, other governments promoted its use and many legal loopholes were used to buy and sell Bitcoins.

Bitcoin offered an international form of money that was issued at a predetermined rate that could not be manipulated or forged, and was as easy and safe to trade with as anonymous cash. Unlike bank accounts that require identification, and that can be closed by the bank, Bitcoin accounts can be opened by anyone anonymously. Unlike the centralized data bases used by bank accounts, requiring trusting the banks, Bitcoin accounts use a decentralized database called the Blockchain that requires no element of trust and no centralized control.

This power of Bitcoin allowed people to become their own banks, buying bonds and shares as investments and saving their wealth freely and securely. 

Banks became financial consultants connecting investors with entrepreneurs. They provided facilities with fire-proof safety boxes where people stored their private keys that secured their Bitcoins. In this way people secured their private keys not only from loss or prying eyes, but also ensured that their inheritors had access to the safe in the event of their death. 

In China, the government controls both the banks, the corporations and the people. 

In America, the corporations controls both the government and the banks and the people. 

Would it not be nice if the people controlled both the government and the corporations? 

Money runs the world and Bitcoin allows people to be in control of their money. By 

• voting the right politicians to represent us, 
• voting with our wallets to control the corporations, and
• adopting Bitcoin to take control of their money, 

people have a chance to free themselves from enslavement and make a better world for their children.

In 2009, Bitcoin was worth 1$. 4 years later in 2013 the price had risen to 1,000$. 4 years after that in 2017 the price reached 20,000$. This price increase closely follows the increase in the scarcity which is halved every 4 years.   

If this trend continues, 2021 should see prices as high as 100,000$. 

As you can see from the figure above, most of the Bitcoins have been already mined. On the other hand, Bitcoin adaption is just starting. with less than 1% of people having Bitcoin. Some believe that Bitcoin can be worth 1,000,000$ within 10 years. 

Inflation proof:

Saving in fiat currencies, especially at zero interest rates, is seeing the buying power of your saved money slowly weaken by inflation as more and more money is issued into the economy to try and save it. This is much like trying to keep a leaky bucket full. 

The rate of Bitcoins issued is fixed and limited to 21 million. Most of the Bitcoins have already been issued to relatively few people who are using Bitcoins as a way of saving. Their interest is to raise the price of Bitcoin and if they manipulate the price, it will be to raise it. This make saving Bitcoins as a safe way to save wealth, either for short term private investments or long term investments for your children and grand children.  

Can not be seized:

While gold, property, houses, and bank accounts can be seized, as long as you or your inheritors have your key, your Bitcoins are secure from loss, theft, or seizure.

What do you think? Your comments are appreciated. 

  

Brought to you by

https://andrewvecseybooks.blogspot.com/

Banks

In the beginning were kings that issued gold pieces as money. Then came entrepreneurs that managed money of kings and showed that controlling money gave them great powers and riches. Some people realized that by controlling money of people gave them great prestige and power. Many money stores opened and printed notes called money that was backed by gold. When they cheated and printed more money than they had gold, they became bankrupt. The most powerful and biggest banks formed a group called the central bank to protect people effected by bankrupt banks. When the central bank became bankrupt, they decided that backing their money with gold was not such a good idea and created money out of "thin air" called fiat money. 

The role of the central bank was to ensure that there was always enough money to fulfill the requirements of the commercial banks to make loans and have money flow in the economy. The commercial banks made money by lending out money to people to provide a product or service which would attract more money and ensure that the money would be paid back with interest. The commercial bank returned the money to the central bank and kept the interest as profit. If too many people were not able to repay their loans, the commercial  bank could not repay the central bank and would become bankrupt. 

The central bank also set interest rates to regulate how much money the commercial banks lent out. The lower the interest rates were, the more people applied for loans. The more collateral a person had, the more likely he was to get the loan. Loans for houses are easier to get than loans for small businesses, despite that small businesses generated more productivity. Issuing money to productive sectors caused money to flow so that there is too much money and demand chasing the supply and causing prices to increase as seen in inflation. Issuing money to non productive sectors slows the flow of money so that too little money chase too many product causing prices to fall as seen in recessions.       

Debt- A Modern Money Theory

Money started out to be pieces of gold that were hard to find and carry.

Then it was improved by being represented by pieces of paper.

Occasionally people lost confidence in paper money and occasionally nations needed more money than there was gold to back it up.

Money was greatly improved when nations freed their money from the constraints of gold and printed it from “thin air”.

The banks could now lend as much money as was needed to keep the economy running and growing. People took advantage of this lending frenzy and accumulated debt. Many felt that a debt based economy was a form of enslavement that replaced chains and whips. Fortunately, it is possible to be free from this enslavement.

Those who fearfully believe that debt enslaves, save more and spend less. They save for a "rainy day." The less they spend, the less they contribute to the economy.

Those who fearlessly believe in their freedom and embrace debt as a liberator borrow as much money as they can. They power the flow of money and keep the economy moving.

The more successful were the ones deepest in debt. They used their loans to provide products and services and jobs for the smaller businesses. Both big and small businesses provided workers with money to spend on products and services to keep the economy running.

When the economy is stalled because of war or a pandemic outbreak, to get the economy flowing again, money has to be created.

This infusion of new money ironically drains the savings of those who fearfully chose to save their money for a rainy day. The savers end up living up to their name and save the economy by bailing out the spenders. New money is pushed to those with the strongest chance of recovering, so that they could start the flow of money and get the economy running. 

The latest monetary theory of economist called Modern Money Theory (MMT) claims that as long as a nation has its own sovereign money, it can never go bankrupt as it never has to borrow money. It can create money from "thin air". Other monetary theories have governments first borrow money from the nation before they spend it. They set interest rates to control inflation and collect taxes to pay off the debts. MMT on the other hand works opposite to this. Governments set interest rates to determine how much money to create to ensure full employment. They collects taxes to control inflation.

The government creates as much money as needed to keep a healthy economy running. The money, created out of "thin air" is given out as loans to the private sector. It is also used for military, work guarantee programs, infrastructure, health care, education, unemployment and welfare. Taxes are collected to control inflation ensuring any excess money is flushed from the economy.

With close to zero interest rates, creation of money “from thin” air, and bail outs of the “too big to fail”, our leaders seem to follow some wise advice written in some books of wisdom claiming that banks should not charge interest, and that debt should be forgiven.

The important thing is to get the economy running. 

When governments go bankrupt, they bail themselves out by creating money. When citizens go bankrupt, they lose their small business and their homes and become tenants dependent on their landlords and bosses.


In communism and socialism, the government controls the corporations. The corporations determine the supply and influence the demand. The citizens on the bottom are left dependent on the government and end up trading freedoms for security willingly or unwillingly.

In capitalism, the corporations control the government by controlling the politicians. The corporations determine the supply and influence the demand. The citizens on the bottom are left dependent on the corporations who offer them freedoms of consumerism. These freedoms are targeted and valued by adults who willingly take risks to get ahead in life. The children and elderly on the other hand have little freedoms and value their security more.

Communism, socialism or capitalism put the people, the citizens on the bottom. In a just world, they should be on the top controlling the government and determining demand that influence the corporations to supply.

Money makes the world turn round and as long as there is money, there will be money stores called banks that supply the world with it. In the beginning were kings that issued gold pieces as money. Then came entrepreneurs that managed money of kings and showed that controlling money gave them great powers and riches. Some people realized that by controlling money of people gave them great prestige and power. Many money stores opened and printed notes called money that was backed by gold. When they cheated and printed more money than they had gold, they became bankrupt. The most powerful and biggest banks formed a group called the central bank to protect people effected by bankrupt banks. When the central bank became bankrupt, they decided that backing their money with gold was not such a good idea and created money out of "thin air" called fiat money. With fiat money, as much of it as is needed could be created without having to have any gold to back it up.

The role of the central bank was to ensure that there was always enough money to fulfill the requirements of the government to provide services and the commercial banks to make loans and have money flow in the economy. The commercial banks made money by lending out money to people to provide a product or service which would attract more money and ensure that the money would be paid back with interest. The commercial bank returned the money to the central bank and kept the interest as profit. If too many people were not able to repay their loans, the commercial bank could not repay the central bank and would become bankrupt.

The central bank also set interest rates to regulate how much money the commercial banks lent out. The lower the interest rates were, the more people applied for loans. The more collateral a person had, the more likely he was to get the loan. Loans for houses are easier to get than loans for small businesses, despite that small businesses generated more productivity. Issuing money to productive sectors caused money to flow so that there is too much money and demand chasing the supply and causing prices to increase as seen in inflation. Issuing money to non productive sectors slows the flow of money so that too little money chase too many product causing prices to fall as seen in recessions.

People who do not trust fiat money or the banks that create it can hoard gold.



People who are unwilling to support gold miners who damage and pollute the environment can instead support Bitcoin miners using cryptography and the internet to mine “digital gold” that could be also used as “digital cash.”

Bitcoin offers all the benefits of gold without any of its disadvantages and an ease of use for anonymous payments on the internet.

THE END

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