What If the State was Demonetized by Sound Money?

Author Ulric Pattillo has published an interesting piece of what you might call “informed speculative fiction” at Bitcoin Magazine. He lays out a philosophical case of why fiat money has failed society in a number of ways, and then speculates a future where – and explains how – cryptocurrency resolves these problems in the next three decades.

We’re not necessarily endorsing all the assertions or positions in his piece, but they definitely align with what a lot of people in the crypto space think is possible. And if his fictional speculation were to become reality, the world could be a better place for it. It’s a long but entertaining read.

The State as an institution has failed the individual. This is not to place the blame on one party nor “the current administration.” This issue is not rectified by "voting for the right people” or “educating our leaders.” Additionally, the services and agencies employed by elected and unelected officials cannot persist in a future with Bitcoin.

Analogous to the arguments in finance, hyperbitcoinization is not simply adding Bitcoin to the current fiat networks; rather it must be a completely alternate system with the sound money being the dominant unit of account in the world. Bitcoin as a completely trustless and voluntary monetary network conflicts in principle with a system that intermediates and coerces against the incentives of the individual participants in the world at large.

The State, contrarily, exists not by voluntarism or the will of the participants, but the act or threat of violence. Without this feature, The State has no way to generate revenue. The State does not create value, but takes it away in one of three ways: taxation, monetary expansion and confiscation.

Taxation, while portrayed as the upstanding duty of the citizen, is a nothing more than a veiled form of fractional slavery. If one were to be taxed 100%, you would own none of your work and would have no way to acquire property yourself, no different than a slave of times past. If a statist counters that taxes are the fee to live in the domain, then it is then true that there is no such thing as "public property." If I am a part of the public, why am I paying someone else for what I already own a share in? If taxes are a fee, at what point have I paid that fee in full or may decline the services provided from said fee?

"Taxation is a proclamation of one’s slavery to the kings of this earth. It is a celebration of one’s ownership by a master other than God." — Anonymous Bitcoiner

Monetary expansion is when someone exercises their unique right to decree more units of money to be created. As government power has grown to the point where it is now too big to exist, this strategy for sustaining must occur. While Keynesians will mock and dismiss this fear from their ivory tower of privilege, their ideal 3% inflation just means 3% of your buying power is stolen annually and given to the group of the thief’s choosing. Maybe it's cronyism where those benefits are funneled to wealthy corporations. Maybe it's a welfare state and reallocates wealth to people who are incentivized to refuse work. Maybe it's a communist state, where the new money is divided amongst the coffers of inefficient government agencies. Whatever combination of those cases, the victims are the value creators in society. The laborer’s rightful fruits are stolen by manipulating their expected share of the value in the economy without their consent.

A third way of theft is direct confiscation. When the need arises, governments will use their monopoly on violence to lay claim to the rightful property of their citizens. It is hard for privileged Americans to imagine consequences of incarceration or death to resist such an encroachment of natural rights. Is the concept of property now a facade due to complacent citizens that sold all their freedoms to the government for the state-sponsored drug of security? It continuously happens around the world, yet news media conveniently do their best to minimize their criticality.

Netherlands farmers are besieged by their own government in a strategic attempt to seize farm land from the rightful property owners. “Nitrogen emission” guidelines designed by the World Economic Forum (WEF) are the rationale for these efforts that can be seen as a malicious attack on food supply where hunger could be used as a tool for control.

While you may see your bank account as unassailable, the Bank of China, the fourth largest bank in the world, declared their customers' checking accounts to be "investment products," disabling the ability to withdraw. The government, of course, supported this move with a show of armored force at branches that required protection as banks lay claim to value that is simply not theirs.

Before an American could read these stories and assume immunity, the 5th Amendment to the Constitution (aka the Bill of Rights) clearly states “[not] be deprived of life, liberty or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

The ambiguity of both clauses only needs the “right kind of wrong” political leaders to make the “you will own nothing” dystopia a reality in the U.S.A., a country with a growing dismissiveness of the criticality of individual liberties. Maybe America has avoided such abuses due to citizens' right to personal armament, but there are obvious campaigns to counter that as well on a regular basis.

If expropriation was the only infringement on societal abundance, it would be enough to abolish. The failure of the taxation to actually fund the State’s existence causes rational minds to count the costs of the status quo. Would The State exist if it simply did not have a monopoly on violence? It is likely for more leadership turnover, but the root cause is still present: The current ruler will exercise all of their power to survive a hostile world. The monopoly over the power to define money causes an aberration like the financial death spiral shown below.

Is there any justification for the wasteful institution except “this is how it has always been?” In the present day, The State model of governance has bitten off more than it can chew. It has led to unnecessary economic losses, unfathomable theft and disconnection with value. Not until the discovery of Bitcoin, has such a clear light been shined on the criminal nature of The State.