Fiat

How The Fiat Standard Has Impacted Relationships, Sex And Family — And How Bitcoin Can Fix It

01/07/2022 by Idelto Editor

The fiat standard has drained the value out of more than just money, leaving family units a weak shell of their former strength.

This is an opinion editorial by Paloma De la Hoz, a licensed psychotherapist and psychologist with a focus on sex and couples therapy.

“The government cares about you” is a fairytale that many people choose to believe nowadays.

When I started going down the Bitcoin rabbit hole, I learned about the evolution of money and I was surprised to find that the present is the first time in history that money has been purely controlled by the “state.”

I dare to say that most of the population is unaware of what the fiat standard is, let alone the often-fatal consequences it has on the family and the very evolution of human society.

I had always had the feeling that something was wrong with society. Everything is connected, of course, but to discover the cause of what is screwing everything up, just blew my mind.

Generations of people over the past century, especially the most recent, are plagued by what I personally call “fiat behaviors.” Most of them are immersed in an incongruity of life and the way out feels as complex as exiting a maze. Such a waste of human potential.

This article is the result of my personal experience as a psychologist for most of the last decade of my life, alongside my more recent discovery of Bitcoin, the fiat standard (thank you Saifedean) and all that it entails.

I will share my opinions on why I believe that the fiat standard affects the family, couples and sex from a personal, feminine and professional perspective.

1. Young Adults Are Less Motivated To Get Married And Build Families Due To Inflationary Pressures

I remember growing up listening to my parents talk about how everything was always expensive. This came not only from people with humble origins where I grew up, but wealthy people whom I had come across.

When I was just four years old and I was asked what I wanted to be as an adult I always answered, “I want to be a mother.” This thought changed as I got older and by virtue of modern culture I came to develop a “career.” I began to see firsthand the rat race that we’re all entrapped by.

I know a lot of you can relate. Nowadays in particular, it seems as though the cost of living goes up weekly. How can one be motivated to start a family? In fact, I see more young people opting to stay at home with their parents for increasingly long periods of time. This is not normal. Instead of becoming adults, they remain children — albeit overgrown ones.

Misguided Keynesian principles of economics state that postponing current consumption by saving will put workers out of work and cause economic production to stop.

Yet, a hundred years ago, most people paid for their housing, education or marriage with their work or accumulated savings — and the world did not stop. On the contrary, it flourished and formed the basis of the wealth and capital we are eroding today.

When compared to past generations, and in fact, millenia of evolution, we find that modern society is less likely to invest in family because it is decreasingly rational in an economic sense. Family is a low time-preference endeavor, which has little place in a high time-preference society. I would say that this is highly detrimental to everyone, because the family represents the center of society.

It is no coincidence that the dissolution of the family has come as a result of the implementation of the economic precepts of a man who never had any interest in the long term.

2. Due To High Time Preference People Don’t HODL Onto Relationships

I remember when I used to visit my grandfather in the countryside — we had good conversations and he would casually tell me about the situations he and my grandmother were going through as a couple.

He always emphasized how much he loved her and that despite the difficult times he would never trade her for anything.

This thought helped me in my adolescence when I was just beginning to walk the path of life and love.

A phenomenon I see in today’s couples is the ease with which people prefer to end a relationship rather than stay and fix it.

In fact there’s a MTV show “Next” that comes to mind which was basically a person dating and the moment they didn’t like something about that person they would say NEXT!

What a barbaric show.

Just as it is in relationships today — there is a huge tendency, as soon as problems arise, not to try to find a solution but rather to end the relationship. This is a high time-preference behavior.

Mises defines time preference more clearly in “Human Action”:

“The satisfaction of a need in the near future — all other circumstances remaining equal — is preferred to that which can be obtained in the more distant future. Present goods have greater value than future goods.”

To lower one’s time-preference means that you lower the discount you place on the future. That is the basis of all long-term thinking, and therefore behavior.

I believe these high time-preference tendencies are fundamentally caused upstream by broken money. It causes us to mis-value everything else.

If people were really aware of the value of money, they would be much more selective about their consumption and would save a higher portion of their income for the future.

“It is remarkable the culture of conspicuous consumption, of going out to buy as therapy, of having to exchange cheap plastic junk for newer ones…,this culture will have no place in a society with a currency whose value appreciates over time.” — Saifedean Ammous

3. The Fiat Standard Is An Illusion That Promotes Promiscuous Behaviors In Which Affairs And Dishonest Relationships Are The New Normal

It does not seem abnormal to me that in a world where money is controlled by the state, who are the official sponsors of “culture,” that the people within that culture seem to also engage in ever-increasingly promiscuous behavior.

Sex and money rule the world but people are living under an illusion about both. I believe this directly affects the way people behave in their intimate relationships. Perhaps today’s hookup culture is something that emerged under the fiat standard?

Since fiat is the worst kind of money we have had in history I am not surprised that under this state of falsehood people also engage in dishonest behavior such as extramarital affairs and infidelity.

It’s a domino effect. Dishonesty starts with what we touch and move with. Dirty money leads to dirty value judgments, which leads to erroneous behavior, bad actors, dishonest people and fake relationships.

The result of having put money and state together is a whole generation of unprincipled people, living double lives because they prefer not to be honest enough with themselves and with the person they have decided to spend the rest of their lives with.

Of course, there are many other factors, but once again I cannot help but wonder if they are all linked.

Nowadays we glorify casual sex — without discussing the energetic consequences — in the same way we promote materialism.

Something is obviously wrong, but most people aren’t ready for this conversation. It requires a lot of inner work to develop a state of self-awareness that allows you to understand and realize this.

4. This Last Generation Of Men Have Been Raised Without Any Masculine Pride — State Money Promotes Feminism And The Destruction Of Families

If we look at things through an energetic lens, the result of the absence of women at home is the outgrowth of an entire generation of feminine men who have lost their pride and masculinity.

Raised under the shadow of often tyrannically feminist women, they unconsciously drop their masculine frame and develop shadow feminine tendencies. This, by the way, is the primary cause of unhappy, sexless marriages that end in divorce.

From my perspective, this can all be traced back to how inflation has forced women to replace home with work in order to support their families.

In prior centuries, before the advent of the fiat standard, women stayed at home to care for the children and nurture the family. What an incredible gift to the world. Men maintained their dignity and pride by going out to build, create and provide. What a team they were!

“This is where the disconnect lies in the world today.

We have deprioritized the creation of HEALTHY married family units because we view men and women as separate competing entities in an inherently oppressive system instead of two forces working together for a common cause – the raising of children.” — J.Malik

I believe forcing women to leave the house and be absent in the day-to-day raising of children has unleashed generations of unframed men with weak character.

The modern woman is everyday less and less interested in being a mother — she is more focused on being a “career woman.” We highlight the burnt out superboss chick mom as an ideal that women should be striving for. I think women have convinced themselves that all this so-called “female empowerment” is in their favor, but it is the opposite.

In their unfortunate ignorance and blindness they are unaware of their true gifts. They’ve become a product of the parasites and lemmings (as Aleks Svetski would say) running the state. These people care not about women or the family.

Women would be better off if they did not have to worry about making money to support their families. They would have the time and space to flourish. If I were a man I would be accused of being a misogynist, but since I am a woman, a psychologist and sex therapist, I base this opinion on my own experience.

I am a woman and I recognize that my life would be less complicated if I did not have to dedicate a significant portion of it trying to “compete” in the marketplace. I would much rather spend my time raising a family and nurturing my man, my children and if I have the time, my community.

I’m not sure a greater purpose exists, as a woman on this earth.

“We live in a feminist establishment because generations of weak men dropped frame which caused them to lose power in their relationships and over their children. We live in a feminist establishment because women are collectivist and gain power through their coordinated voting bloc. We live in a feminist establishment because fathers have been disempowered by governments who have robbed them of authority over their children by letting women have total psychological control over their upbringing. We live in a feminist establishment because our societies have become promiscuous which has created a large group of both celibates and eternal bachelors who have little positive influence over the women in their society.” — Jerr rreJ

If the state cared about you, or the preservation of the family they would not be devaluing our savings or making it impossible to live by printing money out of thin air, and playing god with our cultures and ways of life.

In Closing

I dream of a society in which we can go back to being closer to our unique, individual essence. My hope is that Bitcoin creates this opportunity.

Svetski has called Bitcoin “Responsibility go up technology” because it is fundamentally a kind of money in which responsibility must be borne by the user. Not your keys, not your coins. This is not only present at the level of the individual, but all the way up through larger organizations (no bailouts).

By upgrading to responsible, sound money, I think we change the behaviors of people so that they’re once more in line with their core nature.

Masculine framed men may once again lead, and women in their feminine will nurture and bring forth color and life to the world.

This is a guest post by Paloma De la Hoz. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Bitcoin Songsheet: The Fiat Reality Of Real Estate

27/06/2022 by Idelto Editor

When human living space becomes an investment and store of value, the ownership of said land becomes distorted and centralized.

This is an opinion editorial by Jimmy Song, a Bitcoin developer, educator and entrepreneur and programmer with over 20 years of experience.

Real estate is a fiat possession.

Not only is it ridiculously expensive, but it’s also difficult to maintain. Anyone that buys property is buying themselves a job. It’s the epitome of the quote from Fight Club: “The things that you own end up owning you.” What’s worse is that the rights over your property are limited.

Governments love pumping real estate because it gives people a sense of security and because it’s easy to tax — and pump it they do. Through mortgages and favorable tax treatment, home ownership has been a tool in the game of bread and circuses in which governments are continuously engaged. They use real estate as a way to both mollify and control. As a result real estate is a centralized, tenuous form of ownership, dependent on the whims of politicians.

Real estate isn’t portable, so it’s very easy to tax. The ease of taxation ultimately means that the government can degrade the property rights of the owner. As I will show in the rest of this article, land ownership has been debased and is in many ways the ultimate fiat possession. The authorities get to decide just how far your rights really go, and in many cases, it’s not very far.

Nobody Really Owns Land

The government backs up its taxation power with threats of force. The threats in this case include taking the property away from you. You may think you own the land, but in reality, you have exclusive use of it with the government’s permission. The government can take it away at any time — and on a long enough time scale, they eventually will.

Your possession of the land is like a company car. You can use it for as long as you follow the rules, but the possession is tenuous and dependent on keeping the real owner happy. Our real owner in the case of all real estate is the government.

In that sense, real estate is really a long lease from the government. They’re the real owners and we need permission from them to use the property. As long as we pay our taxes and use the land in a way that’s approved, we can use the land. But using the land in a way that they don’t like means they will take the land away. We have the illusion of possession when in reality it’s a rental.

Zoning Ordinances And Eminent Domain

Zoning ordinances are a way in which governments restrict what you can do with your property. If land is designated for certain types of use, you cannot use it for anything other than that use. So land zoned for residential use cannot be used for commercial use and vice versa. This changes the value of the land since it gives advantages to certain lots of property over others. Zoning lets authorities pick winners and losers.

As with other government orders, zoning is backed up by force. You can be dispossessed of your land much like your company car if you piss off the real owners.

What’s worse than zoning laws are eminent domain laws which allow the government to take land for a “fair price.” If the government wants to take land away from you, they can for almost any reason.

Usually it’s for some “public good” like a highway or an airport. What’s been particularly egregious the past 20 years has been the use of eminent domain for “economic development.” This is the practice of taking away property from one set of people and giving it to another so they can “develop” the property in a way the authorities like. Eminent domain is picking winners and losers and is abused on a regular basis.

The property rights of the land-owner are severely diminished by this power. Sadly, land rights in other countries are even worse, where property is centrally controlled and given out as political favors.

Scarcity Of Real Estate

Yet despite all these disadvantages, real estate continues to go up in price. Long-term, it tends to be a very good investment, outpacing CPI.

The reason why, is because of the scarcity of real estate. When there’s extra money coming into the economy, it tends to find its way toward scarce assets. As they say, they aren’t making any more land so it has a tendency to appreciate faster than other things.

Furthermore, real estate has a privileged position in central bank-backed monetary systems because there are special loans available for them. Mortgages are treated very differently and have lower rates than other consumer loans. Think about how much lower your mortgage rate is compared to your credit card or even personal loans. Mortgages add a lot more money to the economy and enlarge the supply of money. Real estate has been and continues to be a large Cantillon winner.

Confusion About Mortgages

This is probably a good time to clarify something about mortgages. Most people think that mortgages come from someone’s savings. They think that multiple people getting 1% in their checking accounts are the source of their mortgage at 3%. They reason that this would give 2% to the bank. Somehow, this funds the lavish buildings, security systems, guards, vaults and ATMs. Of course, this is not the case.

Mortgages are not money coming from someone’s savings. They are printed into existence by the bank for the benefit of the borrower. A $500k house usually requires a $100k down payment. The other $400k does not come from someone’s savings, but through newly created money. The $400k is created for the borrower’s benefit at the time of the loan.

Thus, there is no opportunity cost for mortgages for the bank. The only risk for them is default, and even that is covered by mortgage insurance. In particular, Fannie Mae will insure any mortgage that fits certain criteria. The bank wins because they get interest on money that they create out of thin air. The borrower wins because they get access to capital. Who loses? Everyone else whose money is being debased. We are eating our own tails to stave off starvation.

Thus, banks make risk-free profit for every qualified mortgage and they make as many of them as they can. The result is that they print money like there’s no tomorrow because they are incentivized to. The new money coming into existence is of no concern to them.

Because mortgages give access to newly printed money, this is one of the few ways that consumers can get in on the Cantillon effect. Real estate benefits disproportionately because the creation of this money requires the purchase of real estate. Hence, real estate tends to go up in price disproportionate to other goods in the economy. They are simply at the front of the line when it comes to Cantillon Effects.

Store Of Value

Because of this peculiar Cantillon Effect, there’s a collective sense that real estate is a good store of value choice over the long term. Combined with its scarcity, the perception is that housing will continue going up in value.

The result is that housing, even when corrected for inflation, has become way more expensive. One way to measure this is the housing cost-to-income ratio. In the 70’s it used to be around 4. That is, the average person would buy housing that’s worth 4 times their yearly income. Currently, it’s around 8. This is a large premium specifically from its utility as a store of value. People don’t want real estate so they can live in it or use it for production. They want real estate so they can store value.

This is most obvious when looking at a market like China. The association of land and wealth is so strong there that more people buy second homes than first homes. Even third homes are roughly as common as first homes. This isn’t necessarily because people want to have lots of places to vacation — it’s because homes are a good way to protect against wealth devaluation from inflation.

As a result, we see not only unfinished buildings, but entire cities of empty buildings. This is gross malinvestment that destroys capital, and it’s all over China. There is such a thing as too much housing, especially in a country whose population growth has slowed to a crawl.

Fiat Architecture

The irony is that even with all of this money coming into real estate, it’s more transient than ever. Most residential homes are torn down and rebuilt every 25 years or so, especially in desirable areas. The materials that are used don’t lend themselves to lasting a long time. The homes reflect the high time-preference behavior of fiat money.

Buildings have been debased along with the money. One of the reasons is that most of the time, the people that develop the land are disconnected from the people that end up living in the home. Developers mass produce homes and produce inferior quality goods because there’s so much artificial demand from fiat money. Homeowners get in debt and end up paying for shoddy craftsmanship.

Contrast this to buildings under sound money. There are entire towns in Europe where houses are built of stone and have lasted for centuries. Most homes being built now are unlikely to last anywhere near that long.

Bitcoin And Real Estate

The store of value premium on real estate will likely last as long as fiat money does. Mortgages are politically favored and are likely to continue getting fiat subsidization as long as fiat money lasts. The advantages that real estate gets over other assets are great and unlikely to disappear under a fiat standard.

Under a Bitcoin standard, however, real estate is likely to be cheaper and more affordable. Creating loans for the sake of housing has resulted in high housing prices, so that will clearly cease. Also, home buyers won’t be able to buy on leverage, which is really bringing future consumption forward. That behavior won’t be available because loans will have to come from savings. Interest rates in that case are likely to be much higher resulting in fewer people buying on leverage.

Homeowners will actually have to save and will have lower time-preference in their purchases. Instead of frantic building by developers, we’re likely to get more custom-built homes, which will be better constructed and last longer. Ultimately, this means that the quality of homes will go up, even as costs come down. We can reasonably expect more people to own homes at a lesser cost as people use bitcoin as their store of value instead of real estate.

Let’s hope this happens soon.

Ten Ideas Coming to Real Estate

No money down, cash back to buy a condo.
Lending your house to a custodian for a 2% return so you can lose your house when they go bankrupt.
Squatters’ rights that mature faster depending on how oppressed you are.
Seize property from people who don’t mask indoors.
Private mortgage insurance that requires signing over your first-born.
Eminent domain to take land from fossil fuel proponents.
A real estate tax only for men.
Smart-contract based houses that lock you out whenever Solana goes down.
Discount on real estate taxes for putting up one of those “in this house we believe” signs.
Your house will preemptively be taxed for the carbon emissions it’s expected to make over the next 30 years.

This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Ruble Hits 7-Year High, Bukele, O’Leary Unfazed by Crypto Downturn, Elon Musk Will Keep Buying DOGE — Bitcoin.com News Week in Review

26/06/2022 by Idelto Editor

As sanctioned Russia’s fiat currency soars in value against the U.S. dollar, and crypto markets remain unpredictable, economists and crypto enthusiasts continue to puzzle and debate over what the next market move will be. In spite of this, several influential voices remain unperturbed when it comes to the future of decentralized digital assets, with Salvadoran president Nayib Bukele, Tesla and Spacex CEO Elon Musk, and Shark Tank’s Kevin O’Leary all recently reaffirming their faith in the cryptocurrency ecosystem in one way or another. This is the Bitcoin.com News Week in Review.

Russian Ruble Taps 7-Year High Against the US Dollar — Economist Says ‘Don’t Ignore the Exchange Rate’

Recent news reports have detailed that Russia’s fiat currency, the ruble, was the best performing currency worldwide and the articles explained that American economists were perplexed by the trend. On Monday, the Russian ruble rose to 55.47 per dollar, which was the highest increase since 2015. While many have dismissed the ruble’s exchange rate, Charles Lichfield, the Atlantic Council’s Geoeconomics Center deputy director, published an editorial called: “Don’t ignore the exchange rate: How a strong ruble can shield Russia.”

Read More

Salvadoran President to Bitcoin Investors: Your BTC Investment Is Safe, Will Immensely Grow After Bear Market

The president of El Salvador has some advice for bitcoin investors. He believes investments in the largest cryptocurrency are safe and will “immensely grow” after the bear market.

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Tesla CEO Elon Musk Confirms He’ll Keep Buying and Supporting Dogecoin

Tesla and Spacex CEO Elon Musk has reaffirmed his commitment to dogecoin (DOGE), and confirms that he will keep buying and supporting the meme cryptocurrency. The price of dogecoin climbed following his statements amid a crypto market downturn.

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Kevin O’Leary Says He Won’t Sell Any Crypto Despite Downturn – ‘You Just Have to Stomach It’

Shark Tank star Kevin O’Leary, aka Mr. Wonderful, says he is not selling any of his cryptocurrencies despite the crypto market downturn. “Long term, you just have to stomach it. You have to understand you’ll get volatility,” he stressed.

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What are your thoughts on this week’s hottest stories from Bitcoin.com News? Be sure to let us know in the comments section below.

Choose Your White Paper Wisely — Bitcoin Versus Credit

21/06/2022 by Idelto Editor

There exists two monetary paradigms now, and everyone has the opportunity to inform themselves about both — Bitcoin and credit.

This is an opinion editorial by Conor Chepenik, a contributor to Bitcoin Magazine.

Humans are derivatives of other humans. Initially, we learn how to act based on our parents’ behavior and as we get older we develop critical thinking skills and parrot the talking points of others that resonate with us. That is why choosing what you fill your mind with has never been more important. As humanity continues down the information technology revolution we need people focused on building new systems that prioritize love, liberty, freedom and fairness. I worry that our current system is filled with people trying to impose top-down controls or figuring out how to go viral.

But blaming people for wanting to go viral is a lousy argument.

“Show me the incentives and I’ll show you the outcome.” – Charlie Munger.

Some people with large online followings provide legitimate value, but the majority post half-truths in an effort to make their followers trust them. Not many influencers showcase their struggles because nobody wants to buy a product from someone who is miserable. Influencers need to sell the idea that you can have a life like theirs if you buy their course, product or whatever else they might be peddling. It takes a lot of curating to fill a social media feed with people who provide real value. If you don’t put in this time up front, your feed will be filled with products that are like altcoins: cheap knock-offs. Munger might be wrong about Bitcoin, but he was spot-on about incentives. Social media companies want to keep people scrolling on their platforms so they can monetize our attention. Thus, when you ask kids what they want to be when they grow up, the majority say a social media celebrity rather than a scientist, firefighter, astronaut, engineer or any other profession that benefits society.

So when did everything become so perverse that children are more eager to show off their life online rather than do a job that benefits society? It is impossible to pin this to an exact moment, but I’d argue it all started when the Bank of England decided to monopolize credit to fund their war efforts. This type of top-down control was the first form of quantitative easing and the inception of the credit-based fiat system, or “The Original Sin” as Saifedean Ammous calls it. Credit is never as good as gold, but when a bank acts like its credit is, the result is devastating. The incentives that came out of this have made the fiat system a truly sinister one. This quote from Ammous on The Lex Fridman Podcast is a perfect example of what happens when the entity with the biggest stick starts asking for value without returning the favor:

“I call it the fiat white paper — you know in Bitcoin we have the white paper — the fiat white paper was that the Bank of England announced to all of its banks and post offices: from now on, you should not make payment in gold, and you should take payment in gold, and you should encourage all of your customers to turn in all of their gold and give them paper instead.”

Unlike gold, credit doesn’t require proof of work. As Saifedean so elegantly points out in “The Fiat Standard,” one of the first bond sales for WWI issued by the Bank of England raised less than one-third of the bonds being subscribed. Rather than stopping the war the Bank of England gave their two top officials a line of credit and had them buy the remaining two-thirds of the bonds. Rather than provide actual value, the Bank used its monopoly on money to fund itself and continue fighting a war that its citizens clearly did not have an appetite for. This type of top-down control has had lasting impacts and has resulted in a lot of parasites gaining wealth without providing value.

As most people reading this publication know, another white paper was released in 2008 that cut out parasitic middlemen. A white paper that described a system not based on credit, but instead required providing value in the form of energy in order to obtain this new currency. This system required no third parties and allowed people to trade in a peer-to-peer fashion without a middleman butting in to take a cut. The incentives of this network called Bitcoin are so beautifully aligned that the longer the network exists, the more secure it becomes. It’s a truly incredible feat of engineering that has the power to completely undermine the current system of parasites and credit expansion. The fiat system has given rise to pointless wars and made saving and investing nearly inseparable. Satoshi Nakamoto gave the world inflation-proof money with some open-source software.

Under a Bitcoin standard, it would be very difficult to make money without providing real value. If you take away the incentives of aligning yourself next to powerful government officials, the world would be a better place. There will be no more backroom handshakes because no matter how much power or wealth one acquires one cannot change the rules of the Bitcoin network. Many will have to make a choice in the coming years about how they want to store their value. One system mines new currency via credit expansion while the other requires hardware and energy to do so. One system lets parasites thrive while the other just has rules that cannot be changed.

Even those who are lucky enough to reside in a wealthy nation still see their purchasing power destroyed in slow motion via inflation. If bitcoin is not adopted globally, humanity could end up in a never-ending cycle of war since the only foreseeable way to keep the fiat system propped up is through constant growth. Constant growth is not always attainable and fiscal stimulus is like crack: The first hit is fantastic, but then you need more to experience the same result. When everything starts to unwind and the system looks unstable the logical conclusion under a fiat standard seems to be to start a war. Fiat corrupts people over time. It’s not a gradual corruption, but it’s a slow and steady one, like the decline of the dollar. Fiat is so corrupting that House Majority Leader, Steny Hoyer, declared the United States is at war with Russia. There was no vote of Congress to declare war. It seems that when you have been in the fiat system for so long, you forget that other people expect you to play by the rules. I found this to be a perfect example of what a corrupt system does to those in it.

Bitcoin does the opposite to people. Recently, I found out my girlfriend was pregnant. The first thought that popped into my head upon hearing this was “Thank god for Bitcoin.” I know this sounds insane, but if there was no way to opt out of the rotting fiat system I would be horrified to bring life into this world. The second thought that popped into my head was “Wow I’m really going to be a Dad, I can’t wait to give my child a good life and raise them to be a good person.” Bitcoin taught me that low-time-preference activities are what lead to a fulfilling life. As far as I can tell there is nothing more low time preference than having children. There is a ton of uncertainty in the world and the only thing that seems to be guaranteed is Bitcoin adding blocks roughly every 10 minutes. Had it not been for bitcoin, I would not have felt comfortable in the decision to become a father. I’m not a math expert but I can tell that 30 trillion dollars of debt is so much money that even servicing the interest payment will be a massive challenge. Paying off the principal is starting to seem like a pipe dream as governments continue to run deficits and spend money they don’t have. When you really dig into the math it seems apparent why the House Majority leader is calling for war. They want a way to refinance their debt! Screw public opinion or the thousands of problems the United States has in its own country, politicians want war with Russia. War is not the answer to the United States’ problems, and it is more important than ever to adopt a system that doesn’t always lead back to war.

The incentives to go to war under the fiat system are powerful right now. Rand Paul was ostracized for delaying a $40 billion package, money we don’t currently have without borrowing, to Ukraine. According to NBC News, “Paul, a libertarian who often opposes U.S. intervention abroad, said he wanted language inserted into the bill, without a vote, that would have an inspector general scrutinize the new spending.” The reader can decide why the U.S. government would be so against letting an inspector general monitor where the money goes. My guess is because it is a lot harder to launder money when someone is overseeing how it gets spent. The more our government pushes for war instead of diplomacy, the more it becomes clear the game is rigged. You don’t usually see Republicans and Democrats on the same page, but there was a big bipartisan push to give Ukraine $40 billion, and the bill got pushed through despite Paul’s effort to get some oversight into how the funds will be spent. Imagine playing a football game and right after your team scored the winning touchdown the referee decided to change the rules of the game, which results in your team losing. Now imagine doing the right thing your whole life — saving, paying taxes, helping out the local community — and right before retirement, the government prints trillions of dollars and changes the game. At first, this might seem great as your assets skyrocket. When reality sets in shortly thereafter and inflation decimates people’s purchasing power, things get ugly. I’ve personally witnessed fiat make people bitter, resentful and perilous. I’ve also witnessed myself and others become more patient, loving and happy as a result of bitcoin. Bitcoin is what made me comfortable in becoming a father, effectively saving the life of my unborn child — and I imagine it can save the lives of many others.

There is no pleasure in watching those who do the right things get upset because the system that promised them a better life ended up decimating their purchasing power. It’s not easy to tie the second- and third-order consequences of printing money back to quantitative easing but it is clear that as money is devalued everyone suffers in the long run.

On the other hand, the borrower has to work his whole life to get enough money to back pay the loan plus interest. It makes no sense why the bank gets to lend money without an opportunity cost but the borrower has to face many opportunity costs in order to acquire the same type of money. The fiat white paper will have you leveraged up to the teeth trying to afford basic necessities like a home or a car. Keynesian economics has led us to the point that you can even finance a 15$ pizza now. It is a tragedy that inflation has decimated people’s purchasing power, but financing food is not the way to solve the problem. Luckily, there is another white paper that doesn’t lead to everything becoming financialized.

The Bitcoin white paper will help you sleep at night knowing new coins will only be given to those who followed the rules. One system can create an infinite amount of money while the other is capped at 21 million. Pick your white paper wisely: your life’s value depends on it. For those not living in a Western society, I imagine I don’t have to explain the unjustness of our current system. The U.S has been exporting our inflation globally for quite some time now and we are reaching a point where it has gotten so bad even people in the United States are starting to feel the inflation. Ignorance might be bliss in some situations but once you see how broken the fiat system has become it is clear that we need a new one. It is never too late to opt out. The masses hold the power; most just don’t realize it.

Ultimately, I have no problem with lending money. The problem is lending money when you don’t have to sacrifice anything to get that money in the first place. It cannot be understated how the ability to issue money at will, without an opportunity cost for doing so, has caused tons of parasites to thrive and massive amounts of capital to be wasted. All people, organizations and governments are prone to human error. The free market does a good job correcting these errors, but when central banks step in and impose top-down controls that prevent the free market from doing its job, these human errors become worse. Under a Bitcoin standard, the world will be a better place because people will have to provide actual value in order to be lent money. Getting a line of credit from someone who has no opportunity cost makes the lender and borrower less concerned with the outcome. Under a Bitcoin standard, both the lender and borrower would have much more to lose and a larger incentive to be productive with the money rather than parasitic. Any decent person is more concerned about paying a loan to a friend or family member than a random bank that is lending out money that is not technically their own money. There has been a lot of manipulation and financial jargon to keep people ignorant of the problems within the fiat system. Luckily, top-down controls only work when you can incentivize people to enforce your will. History has shown us that wars stop when the money either runs out or becomes worthless. Bitcoin is built from the bottom up because the incentives of the network get people to participate via their own free will. No one knows exactly how the future plays out, but if you follow the incentives it seems the outcome will be in favor of Bitcoin.

Sources

ABC News, ABC News Network, https://abcnews.go.com/Politics/senate-passes-40-billion-aid-ukraine-bill-heads/story?id=84835587

Ammous, Saifedean. The Fiat Standard: The Debt Slavery Alternative to Human Civilization. The Saif House, 2021.

Cuofano, Gennaro, and About The Author Gennaro Cuofano Gennaro is the creator of FourWeekMBA which reached over a million business students. “Network Effects in a Nutshell.” FourWeekMBA, 22 Mar. 2022, https://fourweekmba.com/network-effects/.

“House Democratic Majority Leader Steny Hoyer (D-MD): ‘We’re at War!”.” https://youtu.be/yA6PXKYis2U.

“Igniting the Holocaust – Facing History and Ourselves: Burning Money: Hyperinflation in the Weimar Republic.” LibGuides, https://library.randolphschool.net/c.php?g=237930&p=1581974.

Litquidity. “Financing a Pizza over 6 Weeks: Down Bad or Savvy Cash Flow Management??? Pic.twitter.com/obeebk9pnw.” Twitter, Twitter, 15 Oct. 2021, https://twitter.com/litcapital/status/1449057824236097541?lang=en.

“Rand Paul Blocks Quick Passage of $40 Billion Ukraine Aid Package.” NBCNews.com, NBCUniversal News Group, 12 May 2022, https://www.nbcnews.com/politics/congress/rand-paul-blocks-quick-passage-40-billion-ukraine-aid-package-rcna28648.

“Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics | Lex Fridman Podcast #284.” 12 May 2022, https://youtu.be/gp4U5aH_T6A.

This is a guest post by Conor Chepenik. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Bitcoin Songsheet: Like Altcoins, Startups Are New Money Magnets

13/06/2022 by Idelto Editor

These days, startups chase VC fiat and high valuations by attracting newly-printed money but without delivering value. Bitcoin fixes this.

This is an opinion editorial by Jimmy Song, a Bitcoin developer, educator and entrepreneur and programmer with over 20 years of experience.

Link to the audio read of the article.

Startups are a giant fiat game.

They are perceived to be the engines of the economy, the drivers of innovation and the creators of wealth. In reality, they mask the Cantillon effect and make the rich richer while making the poor poorer. They waste money and burn through capital like there’s no tomorrow. Startups embody the “get rich or die trying” mentality like insecure Hollywood hopefuls.

Even the few that make it subsidize their good or service through large infusions of newly-printed money, eschewing profits for the prospect of growth. Losing money to add customers is a constant tradeoff, with the hopes of being able to price out competitors to eventually become monopolies. They all hope to graduate to stock market darlings like Tesla, Amazon or Alphabet. With large government interventions likely, even the darlings will likely degenerate to zombie companies like IBM, GE or GM once their fiat-induced monopolistic edges are dulled. Such is the lifecycle of fiat companies, which is as depressing as the life of factory-farmed chickens and just about as gross.

This is a hard essay for me to write, having been a startup veteran of more than 20 years. Yet as I study fiat money and how it changes the incentives everywhere in the economy, I’ve come to the conclusion that startups are as much a grift benefiting from Cantillon effects as investment banks are. They just have the illusion of being more productive because of how busy the people in them are.

Company Valuations, Or Speculations

There are two ways companies can increase in valuation. The first is the traditional way, which is to make more profits. A larger profit means a larger dividend, making the equity in the company worth more. The price increases in equity are rational, or what we would call “having a fundamental basis.” Think getting good grades in school because you actually study and know the subject.

The second way to increase in valuation is through boosting investor demand. Of course, investor demand with traditional investors is directly correlated to the first metric, increased profits, but this is not the case with most modern investors. Modern investors just want to buy what everyone else wants, before they want it. This is what we would call “speculation.“ Think getting good grades in school because of grade inflation.

Speculation is a perception game where valuation increases because of the perceived desirability of the asset. The desirability could be based on fundamentals or based on pictures of a dog. For speculative purposes, it doesn’t really matter. Demand for the equity, whatever narrative it is based on, drives the price.

Investing has traditionally been based on sound fundamentals. Money was invested for some reasonable return, not based on equity price appreciation. Real returns like dividends determined whether money came in. This is how equity pricing used to work.

For the past 40 years, this has decidedly not been the way equities have been valued. Amazon has never paid a dividend, for example, yet continues to attract investment dollars. It attracts investment because of the narrative and speculation around the stock. This is what we call a “Keynesian beauty contest.” The money is invested not for real returns like coupon payments or dividends, but on equity appreciation.

Stock purchases are like infomercials now: way too optimistic sounding and ending in regret. We all know these narratives sound too good to be true, yet perceive other people will buy them anyway and want to get ahead of the crowd. Many such investments have little to no fundamentals but that doesn’t matter if the narrative is good enough to get money in. This is the dominant investment paradigm today because yield has disappeared and price appreciation is the only edge left.

Fiat Equity Valuations With No Opportunity Costs

Equity valuation has trended away from yield and the culprit, as you might expect, is fiat money. In a hard money system, attracting investment requires a return because the money is scarce. Being scarce, buying equity has opportunity costs.

Under a hard money standard, capital demand has to be satisfied from existing stock as new money can’t just be printed. Hence, attracting investment is more difficult as there are many other investments that someone with the money can make. Returns, in other words, have to compensate for the scarcity of money. As a result, equity valuations tend to be based on fundamentals.

Under a fiat monetary system, money is much more abundant and that means there is almost no opportunity cost for money. Investment can be financed, which is not really investment at all, but an arbitrage. Savvy investors can get loans at a low rate from a bank and get a higher return through investing in equities of some kind. The difference is their profit and this is what all fiat investing has become. Every hedge fund, investment bank and venture capital fund is essentially this exact game of leverage and arbitrage at some level. The money in these funds is an illusion, created ex nihilo in the form of loans and then leveraged into an asset.

The abundance of money means that over time, there’s always more money chasing investment opportunities. Attracting investment dollars becomes a much quicker and easier way to increase the valuation of companies than in turning a profit. This is why valuations go way higher during monetary expansion.

Profit is difficult and requires delivering needed goods and services to the market. Attracting new investment dollars in a fiat monetary system is much easier. The strategy is simple: Hype the equity to the right people and watch the newly printed money roll in. Why sell to the free market when you can sell equity to Cantillionaires? Why make a product when you can pump and dump?

Startups Are New Money Magnets

The abundance of money means that the game of attracting money is relatively easy. Newly-printed money is always looking for returns and even a weak company in a fiat money printing spree will attract money. As long as there’s a perception that there will be more investors, the speculative bubble will keep pumping.

Profit becomes secondary to the narrative or perception. Something popular will attract more printed money than something profitable. Valuation will not reflect profitability, but popularity. Profit will only marginally make something more popular and is thus not a priority. This is why so many startups in the past 20 years have been so focused on retail. Perception of growth is more important than profit when selling equity to Cantillionaires. To attract retail, companies offer subsidized goods and services, but the discount comes through dollar expansion.

The game is not about providing a good or service, but about attracting more newly printed money. And why do investors put money in? Because keeping it in dollars is a melting ice cube. Every company is competing, not to make good products and services, but to be the best store of value.

The Moral Quandary Of Insane Startup Valuations

If the asset inflation we’re seeing is funded by dollar expansion, we have to start asking some tough questions about where the insane valuations we are seeing come from. Ultimately, all dollar expansion is theft from current dollar holders. Many of the holders are some of the poorest and most vulnerable people in the world, such as the people suffering from hyperinflation. The dollar is their refuge currency.

The large valuations of equities come on the backs of the poorest of the poor. The rich Silicon Valley insiders, Wall Street bros and startups win while the poorest lose out. Every startup that fails is subsidized by North Koreans who can’t buy rice with the USD in their pocket because prices went up.

Startups are as much the Cantillon winners as Wall Street investment bankers are. Everything about them, including the below-cost goods and services, the sweet perks and large salaries are ultimately subsidized by newly-printed money.

Hype Cycles And Narratives

The biggest companies of the last 20 years have something in common: They are really popular at a retail level. It’s relatively rare to see B2B companies make it big anymore because they don’t have enough retail mindshare to really make it big. The fact that the biggest companies in the world, such as Tesla, Amazon, Apple, Google and Facebook, are also household names is not an accident. The narrative around the companies is more important than the actual profits they make because they are competing to be stores of value.

Think about Uber, Netflix or Snapchat. These are all companies that have some level of mindshare in the retail investor’s mind. That mindshare translates to more investor demand in the company which will create a higher stock price faster than profits.

Perception is part of these companies’ DNA. Their market caps reflect just how much people think they will attract new money, not how much value they add. Because their stock prices are so dependent on public perception, they’ve become much more political and spend lots of money on PR.

This is unsurprising because that’s how all of these companies grew up.

Startup Politics

Startups these days are largely not funded through savings but through venture capital (VC). Even from the start, most startups are in money magnet mode instead of profit mode. To attract investment, they have to play political games.

The dirty secret of VC firms is that most of them do very little due diligence. They pile into what everyone else is investing in. I called them “monetary aristocrats” because their role is very much political. Their main skill is in getting in on “hot” deals rather than in finding innovative new ideas that change the economy.

VC firms do this because getting in on hot deals is a good indicator of what will be popular and attract money in the future. If it can attract money from Cantillionaires now, it’s likely to attract money in the future. Popularity is what matters because newly-printed money is way more important than a good business model or even profit.

So what do VCs choose startups based on? It’s not really about making money anymore, but about who can attract further investment. Thus, the story, or the narrative, around the company is more important than any profit. Perception, even if built on smoke and mirrors, is more important than the fundamental underlying business. The whole thing is a game of image.

Of course, most of these startups fail and therein lies the rub. Capital, most of it newly printed, is wasted on trying to make these companies into unicorns. Even the unicorns are really just substituting as a store of value and have inflated valuations because of the dollar’s poor record.

If this sounds familiar, it should. This is how altcoins operate. It’s not a coincidence that they follow the startup formula so closely. Hype, hype, hype and hope to become a store of value while giving lip service to some utility. In a sense, altcoins are a purer version of the game startups have been playing all along.

They are attempts at capturing the newly-printed money.

Bitcoin Fixes This

The good news is that with Bitcoin, we have hard money again. Once money is scarce, all these speculative games become worse propositions. Every equity is competing to be a store of value, but a much better store of value is here. Why store value in an equity that’s asset inflated when you have something much better in bitcoin?

Investment becomes much more competitive again and the high startup failure rates we see now will not be tolerated. Startups that attract investment will be based on profits, not their ability to attract more investment. Startups will need to make money right away and pay out dividends to justify investment under a Bitcoin standard.

Many will not have investors at all, but be 100% owned by the people who started the company. Capital will come from savings, which have an opportunity cost, rather than fiat loans, which don’t. That means much healthier businesses with positive cash flows from the start instead of the “expand now and profit later” mentality of so many startups today.

In the meantime, we are in a weird in-between state where there are many Bitcoin startups that operate on the fiat model. These are the first businesses that will need to transition to a more rational model of positive cash flow since they compete directly with bitcoin.

This is how Bitcoin fixes the economy. One company at a time.

Ten Reasons Your Startup Ran Out Of Money

Your founder just sucks at pitching
A prominent VC firm passed on you which is really just a way to blackball your company
You hired sales people that started promising perpetual motion machines
Those programmers you hired at $250,000 per year turned out to not be as good as their salaries
Your company of 30 people somehow had five human resources personnel
The consultant you hired to accelerate your growth took the money and only accelerated your spending
You got locked into an expensive lease because VC firms wanted you to project success
Your customer acquisition cost was $1,000 per user
You hired your vice president of marketing from a traditional company
FAANG kept hiring away your engineers

This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.