The guest commentary below was written by Ryan Flynn of Swan.com. This piece does not necessarily reflect the opinion of Hedgeye.
Fiat Has All Its Cards on the Table – Where Do We Go From Here?
Economist Thomas Sowell said that “Politics is the art of making your selfish desires seem like the national interest.” For so long, political systems have created incentives that reward marketers who masquerade as public servants.
Fiat currency, and more precisely, control of the monetary policy governing it, offers the tempting forbidden fruit of compensation without providing commensurate value in return.
Human beings are naturally selfish and in pursuit of self-preservation. If a particular system can be exploited for personal gain, it will be. The challenge for society is to fight back against systems that claim to serve our best interests, but in reality encourage our worst.
We can achieve progress to the extent we can create systems that reward and incentivize our strengths and not our weaknesses.
Bitcoin is the base layer incentive structure that embraces rational human self-interest. It does not pretend that one group of humans is better than another group.
It does not confer special privileges to an elected class only to have that class exploit those privileges at the expense of the rest of society. It is a monetary system with a set of rules that everyone who uses it must follow and which no one can change.
It also happens to have perfect monetary attributes such that if you adopt it before someone else does, more value will accrue to you.
The nuanced point here, though, is that once you adopt Bitcoin, not only do you accrue value, all the existing holders accrue value as well. There is nothing anyone can do to stop this—everyone benefits in equal parts, pari passu.
The more value you store in the Bitcoin network, the more valuable the network becomes for everyone else.
As Robert Breedlove wrote, “free markets represent a natural organizing principle for humanity that converts the pursuit of individual self-interests into the improvement of its collective interests.” Since Bitcoin is an emergent monetary asset operating in a genuinely free market, this is true for Bitcoin.
It is also now true for our money – if we choose to use Bitcoin.
Canada’s Justin Trudeau and Russia’s Vladimir Putin have abandoned the illusion revealed in Sowell’s quote in recent weeks. When governments are backed into a corner, the leaders can no longer obfuscate their own self-interest as easily.
In crisis mode, their intentions become clear as day. They will freeze their own citizens' assets or invade neighboring countries. They will endanger the people they are charged with protecting. They will threaten them with physical harm and financial ruin – as long as their hold on power is ensured.
Though neither Trudeau nor Putin is redeemable, it might be thanks to their own self-serving pursuit of self-preservation that they will lead their people to freedom.
Like Nayib Bukele before them, could it be possible that Trudeau and Putin, and perhaps many other nations and their leaders, will soon have to forgo their privileges and instead opt for a neutral monetary system they can’t control?
They might be forced to actively adopt and embrace bitcoin in one way or another (accepting bitcoin as payment for oil to avoid sanctions, for example) as a last-resort attempt to preserve their own self-interest. And in doing so, they help create a better world for their people.
Making a similar observation as Sowell’s, Ray Dalio said, “Remember that most people will pretend to operate in your interest while operating in their own.” With Bitcoin, our leaders no longer have to pretend.
EDITOR'S NOTE
Ryan Flynn is a Managing Director on the Private Client Services team at Swan Bitcoin. He helps high net worth individuals and financial advisors learn about and adopt bitcoin and contributes to Swan’s research publication, Swan Private Insights. Prior to Swan, he was a founding principal and operating partner at a web-based broker dealer providing private placement services to small businesses. He began his career at a regional M&A advisory and merchant banking firm. This article is from Swan's Private Insight Report, which is an exclusive Bitcoin research report for Swan Private Clients. However, you can download a free copy here.
