Bitcoin has made me check out of the political system

Bitcoin will be the day of reckoning for our politicians

In my adult years I have always taken a reasonably strong interest in politics. I have voted in every UK general election that I have been eligible to vote in, and I have always considered it some kind of moral failing on the part of those who do not vote.

A few months ago, though, I decided I would not vote in another UK general or local election for the foreseeable future. What would change my mind? Probably nothing except a fiercely pro-Bitcoin candidate.

The state is too big and so are its mistakes, but the state never fails

The state has grown too big. I see this as a direct and inevitable consequence of the unlimited fiat money that is at the heart of our financial system, which itself is at the heart of our political system. Access to unlimited money has given our politicians the sense of having unlimited real resources. This in turn has given them a God complex of having unlimited power.

This has emboldened our politicians to indulge in a whole array of grotesque fantasies that command little or no public support, such as lockdowns, the pursuit of net zero, mass unskilled immigration, a perpetual battle against free speech, and wars with ill-defined or constantly changing success criteria. And this is to say nothing of the endless lower-level, pointless government programmes that we seem to have become immune to. Road crossings in pride colours, anyone? A real bargain at only £50,000 of taxpayers’ money.

If this is what becomes of our politicians when they are dosed up to the eyeballs on regular fiat I shudder to think how maniacal they will become when they’re let loose on a bottle of premium CBDC. Withholding my vote from this political class is not just morally acceptable. It is a moral imperative.

The state seems to be over-reaching into absolutely everything. Regardless of whether a left-wing or right-wing government is in power the question posed in response to almost every issue, and to every crisis or perceived crisis, is: “What should the government do?” There is a default assumption that the government should do something. The question is never: “What should the government do, if anything?”

Personal, individual responsibility has left the building.

No debate, please, we’re politicians

It wasn’t too long ago that the starting point of a political debate was that the Left would argue for some kind of government intervention and the Right would argue for much less, or maybe none at all. That debate would not be a merely mechanical, financial negotiation where one side wanted the government to fund £100, the other wanted the government to fund £0, and so they would meet in the middle at a compromise of £50.

No, debates would previously often have revolved around an ideological, philosophical difference about the very role a government should play in our lives, if any.

Implicit in the principle of a robust and ideological debate is that when there are two competing ideas the “right” answer is not necessarily somewhere in the middle. Rather, it is possible that one side is completely right and the other completely wrong.

That ideological debate does not take place anymore. Politics is no longer the forum for an ideological debate. Politicians are simply managers – and bad ones at that. They debate how much of our money they should take, via inflation or taxation, and the only choice they give us is: a lot of tax, or even more tax.

I believe a sound money standard would radically change the political dynamic. Wasteful government spending would have to be minimized for the simple reason that it would be impossible to create new money.

There would be no possibility of using an increase in the money supply as an alternative form of tax-raising, which is what inflation is. Want to lock down a country’s economy for a couple of years? Fine, raise the tax levels appropriately and we’ll see what happens.

Let’s not play house

The broken money has disrupted one of the essential building blocks of a free market: the ability of ordinary people to buy a house. The conservative commentator Douglas Murray, in his book The Madness of Crowds, analyses in considerable depth the cultural misfirings plaguing western nations, such as wokery.

Rather than sneeringly dismiss an entire generation of young people as snowflakes for adopting crazy ideas such as socialism, Murray compassionately asks how young people are psychologically meant to deal with the prospect of never being able to own a home. He asks how young people can be expected to be capitalists when they can’t acquire capital. Throw into the equation an education system dominated by left-wing thought which receives a conveyor belt of impressionable and fertile minds, and can you really blame young people for embracing socialist utopias, or at least flirting with them?

Unaffordable housing damages the social structure, forcing young people to live with their parents well into adulthood. This is unhealthy for the children and for their parents.

In a UK context there are other reasons why houses have increased in price so dramatically over the last few decades, such as uncontrolled mass immigration and a lack of house-building, but the real problem is that a house is not just a house: it has become a savings account, because our money is junk.

On a sound money standard houses would of course still be desirable and they would still represent a significant financial commitment. But they would gradually lose their monetary premiums. The value of houses, as with all other goods and services, would fall over time given the combination of sound money and ever-improving technology.

Sound money is the only solution to the problem of unaffordable housing. The failure of fiat to hold its value over time will always mean that retaining any significant amount of it is foolish, and that people with surplus savings will seek out relatively much scarcer and harder assets such as property. This gives property a huge monetary premium, way beyond its utility value. As more and more fiat is produced, house prices sky-rocket. It becomes impossible for normal people to buy a house.

Think for a moment how perverse the incentives are when it comes to property ownership. There is an incentive to buy a house the minute you can afford it, which probably means most people stretch themselves to buy a house when they can’t actually afford to, and they buy something they don’t really want.

Let’s say you have a child who is starting out in their career. Let’s say with parental generosity they have just enough money to put down a 5% deposit on a house and enough borrowing power in their infant career to scrape together a 95% mortgage for the rest of the purchase price. Let’s say their monthly salary will just about cover their total outgoings but they will have hardly anything left at the end of the month. Let’s say they will also have a small amount of savings after buying the house to keep as a rainy-day fund, to weather the storm of losing their job for a few months or to fund unexpected property repairs and other unwelcome financial shocks.

But now let’s say your child is uncomfortable at the prospect of buying the house: at this early stage in their lives they do not feel quite ready for such a huge commitment. Perhaps they don’t want to be geographically tied down yet. Perhaps they want to rent in a few different places to see which areas are desirable first. Perhaps they are nervous at how tight the numbers are. Perhaps they are worried about falling into negative equity and they want to save a larger deposit so they don’t need such a high loan-to-value ratio as 95%. Perhaps they want to concentrate on establishing their career and increasing their salary so they still have some money at the end of each month to actually enjoy their lives a bit. Perhaps they want a larger reserve of savings when they buy a house so they’re not left running on fumes if they don’t find a new job within three months and face repossession by their bank.

What do you tell your child? In their mind they are being prudent and responsible by deferring the gratification of home ownership. In your mind they are making a huge mistake: given how property increases so reliably and so much over time, and how salaries fail to keep pace, this might be their only chance to get on the housing ladder.

The broken money forces your child to take a decision which involves significant financial risk, just as they enter adulthood. That decision goes against the core principles of parenting advice which you might have otherwise spent the last 20 years trying to impart on your child: to slow down, to be patient, to only buy things they can comfortably afford, to err on the side of caution, to not be in a rush to make big decisions – especially major financial ones. It is purely because of a broken money that you are forced to go against your parental instincts and your child is forced to go against their instincts.

This is your child’s introduction to the so-called adult world: being pressured on the one hand to make a huge financial decision against their will and buy something they don’t really want, or to accept on the other hand the unpleasant likelihood of never owning their own home.

Even on a sound money standard life will always have its financial dilemmas, but this particular dilemma is caused by a broken, worthless money. And for most people it is an academic dilemma anyway, because they will never be able to afford a house in the first place.

The only way to solve disastrous interventions is with more disastrous interventions

The state creates property inflation by intervening in the market of money. The state then performs further interventions in a bid to bring property inflation under control.

For example, a few years ago, to discourage individuals from buying second homes and to incentivize them to sell up those properties, the UK government stopped allowing higher rate taxpayers to claim the mortgage interest of a rental property as an expense against their rental income.

This represented a radical departure from the principle of taxing profits to the principle of taxing revenues, and there was even an unsuccessful legal case against the government. This was no crackpot idea of a left-wing government. It was the UK’s supposedly centre-right, free-market advocating Conservative Party that gave us this particular legislative gift.

The rationale was that this would increase the supply of houses on the market and lead to lower prices. In reality this intervention just punished many people who, through hard work and prudence, or perhaps an inheritance, found themselves in the position of being an “accidental” or “hobby” landlord. Their second property provided them with extra income and they perhaps earmarked it as a pension pot for their later years, or as a future inheritance to lift their own children on to the property ladder. These were the rational, prudent and inevitable objectives of people whose only mistake was to try and outrun the inflation that they had no hand in creating.

The outcome of unaffordable housing is bad enough at the individual and social level, but because the reason for it - a fundamentally worthless fiat money - is never acknowledged by politicians or understood by the masses, we get further bad outcomes at the ideological level.

As property is such a key part of people’s financial lives, a broken property market is misdiagnosed as a signal that free markets are a bad thing. Hence the constant proposal of further interventions such as rent controls. But you can’t have a free market when you don’t have a free market for money. Government screws up nearly everything it touches, and money is no exception. The consequences of screwing up the money are immense: money is the most important economic good because it co-ordinates all other economic activity by generating the price signal for all goods and services in the economy.

It is not the property market that is broken. It is the money market that is broken. This is then misdiagnosed as evidence that the principle of a free market system is broken. I believe this is one of the reasons why even conservative, right-wing parties are tacking continually leftwards. Unlike left-wing parties they will never advocate explicitly for socialism, but their adoption of increasingly interventionist policies and increasingly higher tax rates represents a continual and inevitable slide towards socialist outcomes no matter what type of government is in power.

Who let the inflation dogs out?

There is never an acknowledgement by politicians of the reason for inflation. That reason is the expansion of the money supply, and the only people who can legally increase the money supply are politicians, central banks and commercial banks. It is no surprise that we are not encouraged to dwell too long on what inflation actually is, lest we ask who causes it.

We are meant to swallow the idea that inflation is not the expansion of the money supply but that it is the CPI (consumer price index) instead.

Even CPI is a fundamentally dishonest metric, though: it is calculated by reference to an arbitrarily-created basket of goods and services which can be massaged in any way one wishes in order to produce whatever outcome one is seeking. It doesn’t even include housing or energy costs. Politicians would have us believe that CPI is some kind of scientific metric which will lead to certain outcomes if it can only be maintained at a certain level.

It is naïve, stupid and egotistical of politicians to believe that achieving a certain percentage level of an arbitrarily constructed, fundamentally flawed metric can meaningfully diagnose the state of such a complex ecosystem as a country’s economy.

An economy involves the delicate interplay of infinite variables, and it is experienced in infinitely different ways by individuals and businesses given their own unique circumstances. To condense the health of the money system down to an inherently political and arbitrary health rating as CPI, and then to use this as a proxy for the health rating of the entire economy, is nothing more than political theatre. Like spectators watching a football game we tune in every month to see what the score is. But it is a meaningless, rigged game.

Politicians seem to think the CPI level is like the carbon dioxide reading in Apollo 13. When CPI falls to a certain level the politicians punch the air and congratulate themselves, in the belief they have averted certain death. But it doesn’t mean anything, given the metric itself is fundamentally flawed. In any case, even once the problem is “solved” the money supply will inevitably expand once more, immediately upon arrival of the next real or perceived crisis. On and on the cycle of intervention and rectification-intervention goes. Only Bitcoin can fix this.

We seem to be under a constant pressure to consume more and more, in order to “grow the economy”. Spending our money has come to feel like a moral obligation. Saving money is not only irrational given that it is continually losing its value, but on top of that we are meant to feel immoral or odd for not rushing out to buy things we don’t want.

I resent being pressured by anyone to buy things I don’t want to buy, especially by the government.

Separate money and state

Money is not the only component of politics, but it is the major one. It dominates every election. When the money is broken, politics is broken. When politicians control the money supply, disaster is inevitable.

I don’t hold out hope that right-wing parties are significantly more financially competent than left-wing ones. Marginally, yes, but not enough to avert eventual apocalypse. After all, it was President Nixon, a Republican, who ushered in the era of pure fiat by leaving the gold standard.

If conservatives don’t even stand for hard money then what economic principles do they stand for? Continuing to vote for right-wing parties on the basis they are marginally more financially competent than left-wing ones is like staying in an abusive relationship.

Just as the culture wars have led to the concept of forced speech (you must consider someone a woman even if they’re a man; you must use their chosen pronouns, etc.), fiat represents enforced value: you must find this government-issued paper currency with zero production cost and limitless supply valuable. I refuse to be compelled to find value in things I consider valueless. It is for me, and me alone, to judge what has value and what does not.

During the 2008 financial crisis the prime minister of the UK, Gordon Brown, said he would do “whatever it takes” to get the country through the crisis. This was widely interpreted as an implicit guarantee that no UK bank would be allowed to fail and that all savings would be protected, even above the level of statutory protection (which in the UK is currently £85,000).

If the government is able to provide that assurance in a heartbeat, it tells you everything you need to know about how valuable the money actually is. And it tells you all you need to know about how strong the incentive of banks to remain solvent is.

Nothing was solved after the 2008 crisis because we still have worthless fiat money, and no incentives were changed. It is tempting to think that major financial shocks come along only once every few generations. Many of us probably dismissed the 2008 crisis as one such black swan event. Now, only 15 years later, we seem to be on the verge of another global banking crisis. If and when it comes, it will dwarf the 2008 crisis. Larger and larger crises, at ever-increasing regularity, is just what fiat does - especially in its death throes.

We have become accustomed - or perhaps anaesthetized - to the metric of trillions of dollars/euros/pounds, even though a trillion is a truly mind-boggling sum. It is only a matter of time before we start hearing the word quadrillion frequently. A quadrillion is a thousand trillion.

Bitcoin is the reckoning

What will my decision to withhold my vote achieve? Perhaps nothing other than peace of mind. And that is not nothing. It will give me the comfort of knowing that I am not perpetuating this crooked system. I am leaving the system. I am being the change I want to see in the world.

With no alternative to fiat money our political and economic systems would be destined to degrade in perpetuity. Politicians would be free to indulge their God complex against our will, by taxing us to death through direct tax and inflation in order to carry out their crazed plans in pursuit of whatever The Current Thing is. When everything blows up they would just go back to the beginning and start over again, and we would reward them with a cross by their name at the ballot box. There would never be a day of reckoning for our politicians.

Well, no more of this for me. Bitcoin gives me a way out. Bitcoin is a money that can’t be increased beyond a finite amount of 21 million units. Bitcoin is a money that no government can control. Bitcoin hits politicians where it hurts. It removes from their evil clutches the source of their power and control over us: money.

Thanks to Bitcoin, there will eventually be a day of reckoning for our politicians.

You can follow me on Twitter @OnlyBitcoiner.