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The Fiat Cave: An Allegory of Monetary Deception (Part 4)
If you missed Part 3, you can find it here. We detailed the progression of the fiat monetary system, which we referred to as the construction of the Fiat Cave. We discussed how the Fiat Cave benefits the Fiat Jailers, the Government, and Central Bankers through the debasement of money and that we are falsely distracted by the political system. However, we explain that without freeing ourselves from the shackles of fiat money, we will never exit the Fiat Cave.
We have covered quite a bit on our journey thus far. In Part 1, we explained Plato's Allegory of the Cave and how that would be used to define the monetary systems of past, present, and future. In Part 2, we covered monetary history, the properties of sound money, the fiat financial system, and introduced the idea of the Fiat Cave.
Through this examination of the past monies, we came to realize that humans need money that will preserve their wealth over time (i.e., generations into the future) and in space (i.e., frictionless to send). Despite human efforts to store their savings in the hardest money possible, we learned that our current fiat monetary system is based on theft and deception.
To conclude the series, we will discuss an emergent monetary system, bitcoin. As we will cover in detail, bitcoin frees us from the devaluation of currency, which keeps us prisoners in the Fiat Cave. This new sound money technology will usher in the next period of human flourishing, as humans will be released from their shackles, free to exit the Fiat Cave.
Satoshi Nakamoto: Our Guide to the Light
Satoshi Nakamoto, the pseudonymous creator of bitcoin, released the Bitcoin Whitepaper on October 31, 2008, on a cryptography mailing list.
Bitcoin had humble beginnings. Initially only piquing the interest of obscure areas of the internet, such as cypherpunk and libertarian circles. However, 14 years after the release of the Whitepaper, bitcoin has captivated millions of millions of people globally.
Satoshi's motivation to create bitcoin was primarily due to the dangers and corruption of the fiat monetary system. He recognized that the central banks and governments continued to breach our trust by devaluing the currency for their benefit at our expense. After all, the white paper was released in 2008, in the depths of the Great Financial Crisis.
Bitcoin went live on January 3, 2009. Embedded in the code of the genesis block, the first block in the bitcoin blockchain, was the following text:
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
By including that headline from The London Times, Satoshi was clear with his intent in creating bitcoin. Namely, to provide an alternative to the fiat financial system. As a prisoner of the Fiat Cave himself, Satoshi understood that the corruption of money by governments and banks was to blame for many of our societal ills.
"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible." - Satoshi Nakamoto
By inventing bitcoin, Satoshi liberated us from the shackles of the Fiat Cave. He engineered an alternative to our modern, theft-based monetary system. Those who are skeptical of the false reality, the shadows on the wall, see the light of bitcoin, and choose to follow it out of the cave. Shining bright in the distance, bitcoin exposes the deception of the Fiat Cave and illuminates the truth of the monetary system.
Covered in detail throughout the series, the history of money shows that gold outcompeted other monies due to its scarcity and other monetary properties. Money was chosen by the free market, not decreed by bureaucrats and politicians. However, today, we have fiat money that is controlled by Fiat Jailers, who manipulate interest rates and the money supply for their benefit, which they refer to as "monetary policy."
The Federal Reserve and other central banks have manipulated interest rates to be artificially low, especially following the Great Financial Crisis. As we covered in Part 3, unconventional monetary policies, such as Quantitative Easing, lowered interest rates and inflated asset prices. In addition to asset prices increasing disproportionately to the real economy, the expansion of the money supply has also made them rich and kept us prisoners. The bottom line is that the rules, or the "monetary policy," are changed by the Fiat Jailers, ultimately to their benefit.
Bitcoin is a digital distributed, decentralized network. A network of computers that communicate with each other, with no controlling party. It is a peer-to-peer monetary network that does not require the trust of central banks or governments to operate. A value-for-value monetary network that is based on coordination rather than coercion.
Rather than rules arbitrarily established and changed by Fiat Jailers, bitcoin's monetary policy has been established in code. The code is open source, meaning anyone can analyze the code and see the rules and framework on which bitcoin operates. These rules cannot be exploited by the Fiat Jailers.
Those rules were established when bitcoin went live in 2009. And the most important rule is the hard-capped supply: there will only be 21 million bitcoin, ever.
How is this possible? It’s written in code. The issuance schedule of bitcoin follows a four-year cycle. Every four years, the amount of bitcoin issued decreases by half, in a set schedule until 2140, when the last bitcoin will be mined. At the time of writing, November 2022, approximately 19 million bitcoin have been mined.
Unlike fiat money, which has a fluctuating and "normal" inflation rate due to the Fiat Jailers' policy of increasing the money supply, bitcoin's inflation rate is decreasing and will eventually be 0%.
"Bitcoin is the first digital system which enforces scarcity without any middlemen and is the first asset known to humanity whose unchangeable supply and schedule of issuance is known completely in advance." Yan Pritzker, Inventing Bitcoin.
Bitcoin is monetary truth because it is absolutely scarce. The rules of the system are fixed and not subject to the whims of the Fiat Jailers. 21 million bitcoin forever. Bitcoin is also monetary truth because it is censorship resistant. A transaction is an expression of value and truth.
As we come to appreciate bitcoin's truth, we realize that fiat money is, in fact, deception. Since fiat monetary policy is ever-changing and easily corruptible, there is no objective truth.
Freedom from the Fiat Cave
As we come to terms with the deception of fiat money and the truth of bitcoin, we are curious to know more. The information presented in this four-piece series can initially be blinding and perplexing, similar to the fire when the prisoner is unshackled; however, keep following the light.
If we follow bitcoin out of the Fiat Cave, we realize that the corruption of money has paid for the corruption of all else. Leaving the monetary shackles of currency debasement in the Fiat Cave, bitcoin can set us free permanently.
Bitcoin is freedom from the Fiat Cave. 21 million forever. Bitcoin is the hardest money ever, harder than gold and of course, fiat. Due to bitcoin’s scarcity, we can begin to preserve and grow our savings. There are no Jailers who can manipulate the money supply. The decreasing issuance schedule of bitcoin, paired with the growing adoption, allows for long-term wealth creation. Bitcoin, as money that is free from debasement, emancipates us.
Even more encouraging is that bitcoin does not discriminate. After all, we were all once prisoners of the fiat monetary system, aren't we all the same? Bitcoin is an inclusive monetary network. There are no credit checks, Know Your Customer (KYC), or Anti-Money Laundering (AML) to create a bitcoin wallet. Anyone can begin transferring their fiat money for bitcoin.
Not only does bitcoin provide all 8 billion people with property rights. Bitcoin is censorship resistant. As we begin to unshackle ourselves from the Fiat Cave and begin saving in bitcoin, we cannot be captured and imprisoned again. Similar to physical cash, there are no middlemen in a bitcoin transaction. However, bitcoin is not physical cash. It's better. It can be sent globally and instantly without permission. Now that's freedom. No permission is required.
Bitcoin is making a serious case for the next iteration of sound money. Following in the footsteps of gold, bitcoin is digital sound money that allows individuals to establish financial sovereignty.
The Hostility of the Cave
Just as the freed prisoner in the Allegory of the Cave, once we exit the Fiat Cave ourselves and experience the monetary truth and empowerment of bitcoin, we are compelled to share with others. It's an exciting moment.
We knew that there was something deeply wrong with the world; however, it was never clear exactly what that was. Through the study of monetary history, it has been revealed to us that fiat money is the root cause of much of the societal ills and human suffering.
After our discovery, we re-emerge into the cave. We want to free those that we love. Inform them of what we have learned. That the monetary system is corrupt, it's keeping us prisoners, through the devaluation of currency.
We want to tell them, Don't believe the shadows on the wall! It's not the other prisoners' fault! The Fiat Cave has created a false reality through the distortion of money. The Fiat Jailers have manipulated your emotions through the manipulation of money. They are corrupting the monetary system for their benefit at your expense. You are a prisoner!
But, just as described in the Allegory, we are met with skepticism, judgment, and even hostility. It's a Ponzi Scheme! It's a waste of energy! It's boiling the oceans! It's for criminals!
Our excitement turns into disappointment, we realize that most are complacent in their reality. Not ready to face the truth. Unwilling to question the existence created for them.
However, if we can unchain just one other prisoner, that makes it all worth it.
Fix the Money, Fix the World
To conclude this four-part series, I'd like to share a summary and closing thoughts.
The construction of the Fiat Cave began with the creation of the Federal Reserve in 1913 and was fortified, most notably in 1971, when the US ended the dollar's peg to gold. In this fiat monetary system, the Fiat Jailers devalue the currency, stealing from us, the prisoners. We are kept distracted by shadows on the wall of the Fiat Cave, such as the two-party system. Some prisoners have escaped over the years, but largely we have left these acts of theft and deception go unnoticed.
We have allowed malicious, deceptive, and violent Fiat Jailers to decree paper money upon us. Against the collective efforts of humanity to identify the hardest money to store our life savings, the Fiat Jailers have decreed paper money, backed by nothing besides their deception and violence.
We have become prisoners of the Fiat Cave.
Until 2009, there was no real solution to escape the imprisonment of fiat money; however, with the invention of bitcoin, we have a way to protect ourselves from the Jailers' heists. We can choose to store our life savings in hard money that cannot be diluted, censored, or confiscated.
We can become sovereign individuals, financially free, through apolitical, neutral hard money that does not require us to trust the people who continuously prove themselves to be unworthy of our trust. Bitcoin leads us out of the Fiat Cave, a false reality based on hate and theft.
I firmly believe that the root cause of many issues we face collectively, as brothers and sisters across the world, is due to fiat money. The restoration of sound money, one that cannot be manipulated, one that is absolutely scarce, will allow us to flourish once again.
Fix the money, fix the world.
Thank you for reading. Much love.
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