Long before Satoshi Nakamoto, Frédéric Bastiat had shown how monetary mystification works: "It seems to me that almost all the economic errors that plague this country stem from a false notion of the functions of money". That's why he wrote his essay What is Money?
The fallacy of monetary policy and its consequences
What’s wrong with money? According to Bastiat, it's precisely because money is always confused with wealth. "Wealth is money; to increase money is to increase wealth". This is the sophism that drives the monetary policy of most countries.
“When legislators, after having ruined men by war and taxes, persevere in their idea, they say to themselves, "If the people suffer, it is because there is not money enough. We must make some." And as it is not easy to multiply the precious metals, especially when the pretended resources of prohibition have been exhausted, they add, "We will make fictitious money, nothing is more easy, and then every citizen will have his pocket-book full of it, and they will all be rich.", Bastiat ironizes.
A century and a half after Bastiat, this mechanism for creating false wealth has been taken to extremes. Under the influence of Keynes' ideas, currency control became almost total. Proudhon and Marx dreamed of it, Keynes and his followers made it happen. Money and banks are governed by laws that have no equivalent in other sectors: monopoly, legal tender, fractional reserves (only a fraction of the money deposited by bank customers is available for withdrawal), suspension of convertibility into gold and central banking.
As a result, everything is built on debt: not only government spending, but also household spending, a significant proportion of corporate investment, most of the real estate and automotive sectors, and so on. All over the world, rents, housing prices, fuel, food and many other costs rise as the money supply increases.
This creation of "false legal tender", as Bastiat called it, is at the root of a veritable crisis of civilization: financial debacles, inflation, depreciation of the quality of our lives, confiscation of our savings, widespread surveillance. We are losing not only prosperity, but also freedom and responsibility.
When Satoshi Nakamoto takes to the stage with Bitcoin
For Bastiat, the best way to allocate an economy's resources is through competition. The same applies to money. But how?
Since the use of gold as money was inconvenient and eventually banned by the states, no one in the 20th century could imagine how to take money out of the hands of the states. But the emergence of Bitcoin in 2009 changed all that. And there's no doubt that if Bastiat were here today, he'd be its greatest advocate.
Indeed, Bitcoin is an unprecedented attack on the monopoly of currency, the keystone of the state-controlled system, with its debt economy. According to its inventor, Satoshi Nakamoto, this is Bitcoin's main raison d'être. Only a monetary system "based on cryptographic proof rather than a trusted third party", he said in his White Paper 14 years ago, can resist censorship and "escape the risk of arbitrary inflation of centralized currencies".
Centralized currencies are fiat currencies (state currencies, dollar, euro etc.) that are inexpensive and therefore easy to produce. They favor the individuals who produce them and those who borrow them, at the expense of those who save and are far removed from such issuance.
Bitcoin, on the other hand, is a currency system that is costly to produce, due to the energy expenditure involved, resists inflation and has the advantage of existing outside the various jurisdictions of states. It's a monetary system built on a scarce resource, with an insurmountable limit of 21 million bitcoins, no central bank and no intermediaries. As such, it represents an alternative to the fiat system, and revives hopes for a healthy economy based on real ownership of the fruits of one's labor. Bitcoin's deflationary nature encourages people to save, i.e. to project themselves into the future.
Too much power in the hands of government is a dangerous thing, and history has taught us this mistake time and time again. If Bastiat were here today, as a good maximalist bitcoiner, he'd tell us three things:
1) Buy BTC (not shitcoins)
2) Protect your own private keys
3) HODL! (keep your BTC, don't sell)