The Fiat-Crypto Paradox

The Problem

The financial concept of double expenditure is when a financial instrument or unit of value can be spent by more than one person at the same time. The ability for two people to use the same financial instrument at the same time effectively turns one dollar into two, tantamount to monetary inflation by a central bank which leads to price inflation across all markets.

Although the double expenditure problem isn’t unique to digital currencies, the more prevalent digital currencies become, the more interest there is in the problem. In 2008, an unknown entity under the pseudonym of Satoshi Nakamoto, released a white paper describing a new protocol called Bitcoin that claimed would solve the double expenditure problem of digital currency. Since Bitcoin uses cryptography in securing  transactions in its ledger, Bitcoin was coined – no pun intended – a cryptocurrency.

Although Bitcoin and other cryptocurrencies do in fact offer a potential solution to the double expenditure problem for digital currencies, they also introduce a new problem, a double expenditure problem for the entire financial system where one never existed before. It creates a double expenditure problem in fiat currency like most monetary systems are today, meaning that most financial systems now suffer from a double expenditure problem created by the introduction of cryptocurrencies.

Neither fiat currencies nor cryptocurrencies suffer from a double expenditure problem in and of themselves but when both exist in the same financial system, they create a double expenditure problem for the entire system leading to monetary and price inflation across all markets regardless of central bank monetary policy and regardless of the cryptocurrency’s inflationary or deflationary nature.

The History

A barter economy is the oldest form of trade in which people trade consumable goods and services with one another. A crop farmer might trade his vegetables for a baker’s bread or a blacksmith might trade his horseshoes for a poultry farmer’s eggs.

A double expenditure problem is impossible in a barter system since there’s no way to turn a chicken into two chickens or a loaf of bread into two loaves Jesus notwithstanding. Counterfeiting is possible in a barter system but that’s not double expenditure since it’s not spending the same financial instrument at the same time, it’s two separate instruments.

So although a barter system solves the problem of double expenditure, it’s an economically inefficient form of trade due to the lack of double coincidence of wants. If the baker doesn’t need vegetables then in order to trade with the baker, the crop farmer has to find someone who not only needs vegetables but who also has what the baker needs and trade with him first, then go back and trade with the baker.

A medium of exchange can be used to solve these inefficiencies. Instead of requiring everyone to have precisely the same coincidence of wants at the same time, they can use a medium of exchange that everyone will accept at any time. A medium of exchange is typically one of the most tradeable goods in an economy. A good that has diverse market value, is durable and can be used as a unit of account. Historically, precious metals such as gold and silver have emerged from markets as mediums of exchange since they have utility across many different markets so they’ll maintain their value. They are natural elements so by nature they cannot be destroyed and they can be divided into diverse units of measure for accounting. It’s important to stress that a real medium of exchange is a market emergence phenomenon, nobody has to tell people to use it, it’s not declared by a central committee, government or anonymous pseudonym. Consumers and producers decide individually that they’ll accept it in trade for goods and services. And there can be more than one medium of exchange circulating in an economy at any given time.

The Origins

The double expenditure problem has its origins in deposits like goldsmiths and banks. If you are a wealthy person, it can be cumbersome and dangerous to carry around a lot of gold and silver with you wherever you go. It’s easier to deposit them somewhere and get a receipt for your deposits so you can withdraw them when needed.

Goldsmiths use gold and silver for crafting jewelry and other things out of metals. They’ll take your gold and silver deposits and pay you for allowing them to use them. Since gold and silver are homogenous goods, they promise they’ll have gold and silver available whenever you want to withdraw it. Banks take gold and silver deposits as well and pay you interest on them so they can lend them out to borrowers at a higher interest rate than they pay you. The difference is their profit.

Over time it became more convenient and efficient to trade the receipts for deposits than to go to the deposit and withdrawal some gold or silver every time you wanted to buy something. This was the origins of paper money and the double expenditure problem.

Since gold and silver are homogenous goods, deposits didn’t have to have the same gold you deposited when you came to withdraw it, they just needed to have some gold or silver regardless where it came from. And once people started trading the receipts rather than the physical metals, they rarely came in person to withdraw them. When the depositing institutions realized that, they began issuing receipts as credit against other people’s deposits. So there were multiple receipts in circulation representing the same gold or silver that could be spent at the same time. Voila`, double expenditures! As long as too many people didn’t come all at once to withdraw their deposits, this system of double expenditure was profitable for the deposit and the economy. But when too many people did come all at once to withdraw their deposits, it was called a bank run and the bank would go bankrupt and everyone would lose their wealth which was bad for the economy.

The Federal Reserve

Ostensibly, as a solution to the volatile nature of private banking systems due to their double expenditure practices, politicians, wealthy businessmen and bankers met in secret on Jekyll Island, Georgia in 1910 to define and implement a single national bank, a central bank, the Federal Reserve uniquely responsible for controlling the supply of US dollars – aside from the treasury printing bank notes and the US mint issuing coins.

The Federal Reserve became law in 1913 and subsequent legal tender laws by the government mandated that the US dollar be used to pay taxes , settle debts and that it must be accepted by anyone offering it in trade in the US. This legal declaration by the government made the US dollar a fiat currency, a medium of exchange by declaration rather than a market emerging phenomenon as decided individually by consumers and producers.

Fiat currency did in fact solve the double expenditure problems of the private banking systems since fiat money is not a receipt for anything, there are no deposits of a real medium of exchange that they represent. They are just entries in a ledger or physical banknotes and coins. People can counterfeit fiat currencies but again, that’s not a double expenditure problem.

But this led to a new problem, it left the value of the currency to a political institution by increasing or decreasing the supply out of thin air as they wish in order to manipulate interest rates. Although they can’t spend the same dollar twice, they can create as many new dollars as they want. This sort of monetary manipulation can be used as a political tool. In the year preceding an election, the president can sit down with the chairman of the Federal Reserve and convince him to increase the money supply, lowering interest rates which has an expansionary effect on the economy and makes the incumbents look like they’re good for the economy. Voters will feel economically better off leading into the election and erroneously correlate the incumbent politicians with their economic prosperity. Afterwards, however, the inflationary monetary policies lead to price inflation and a year or so after the election, everything is more expensive and the economy starts to slow down again. This is known as the political business cycle.

The Technological Revolution

Fiat currency has its benefits but it also has a lot of problems. Since a large amount exists in physical form, it’s difficult and dangerous to transport, it’s at risk of being lost or stolen and it can easily be destroyed.

The technological revolution of the 1980s gave rise to the concept of digital currency. A currency that doesn’t have a physical presence. Transactions are all done and accounted for electronically. But, like gold and silver deposits, a digital currency suffered from the same double expenditure problem since the currency was all digital entries in an electronic ledger and digital information is easily duplicated by malicious actors.

In order to address this flaw, blockchains and Merkel trees were implemented using cryptography making each transaction in the blockchain ledger of a digital (crypto) currency mathematically dependent on the others making it almost impossible to alter a ledger entry and spend a crypto-coin twice. These systems are far from perfect, they have other flaws but for all intents and purposes, double expenditure is not one of them.

The Paradox

Although neither fiat nor any of the cryptocurrencies individually suffer from the double expenditure problem, when used together there is a derived double expenditure problem that affects the entire economy regardless of central bank policy or cryptocurrency hash rates.

Say I have $1, if the cost of “mining” is $1 and the market price of a crypto-coin is at least $1 then I’ll pay the resources necessary to try and win the coin. Then the physical $1 that I had in my hand will now belong to the resources that “mined” for me and I’ll have at least $1 worth of crypto on the blockchain. Effectively, I replicated or cloned my physical $1 onto the blockchain in the same sense that a gold smith replicated or cloned gold by writing a receipt for it. The resources I paid have my physical $1 so there are $2 worth of exchangeable value now in circulation and both can be used in trade for all the same goods. Just like the double expenditure problem with gold and silver. This is what cryptocurrencies have created.

This leads directly to financial and price inflation. For example, if there are three people in the economy, Alice, Bob and Charlie and Alice has $1, Bob has nothing and Charlie has a bike for sale that both Alice and Bob want to buy. Since Bob has no money, Alice can offer Charlie one cent and the sale will be made. But if Alice pays Bob $1 to mine crypto for her, now Alice has $1 worth of crypto and Bob has $1. Now they can both bid on Charlie’s bike starting from one cent. The last one to bid $1 will get the bike. The double expenditure of the financial composition of fiat with crypto inflated the price of the bike from one cent to $1.

You can’t use fiat directly on a blockchain, there must be something on the blockchain that represents fiat since nothing is priced in cryptocurrencies, everything is priced in terms of fiat. A token, a crypto-coin something that acts as the unit of account in the blockchain ledger. These cryptocurrencies aren’t real economic goods, they’re not produced by putting resources together in such a way that the value of the product is greater than the sum of the inputs like bread or vegetables. They are an electronic reward or prize for validating blockchain transactions and being the first one to guess a random number. This is called “mining” and the more “miners” there are the more difficult and more expensive it is to win the prize.

There exist mining farms where people maintain hundreds of computers trying to win the crypto-coin. If the costs of mining a single coin are less than or at least equal to the market price of the coin, then it’s profitable to mine, but where do these costs go? Mining farms require large spaces, lots of computers, cables, cooling devices, people and a lot of electrical power. So the owners of these farms use fiat to pay for mining and the blockchain generates a new crypto-coin on the blockchain with the market value at least equal to the costs of mining.

The fiat spent on mining remains in the economy to be traded and the individual paying the miners now has a crypto-coin worth at least the same value of the fiat he spent on mining costs that he can also use for trade. The same monetary value can be spent by two people at the same time.

It’s a double expenditure problem created by composing two non-double expenditure problems: fiat and cryptocurrency.

That’s because cryptocurrencies are not real goods like a chicken or loaf of bread, they are artificial goods created out of thin air by a computer program as a token for fiat trade on a blockchain in the same sense a gold smith creates a receipt out of thin air for gold. Miners are “digitizing” fiat onto the blockchain but at the same time, the fiat that was digitized remains in circulation so that monetary value has been doubled and can be spent by more than one person at the same time leading to price inflation across all markets.

The Conclusion

Cryptocurrencies solve the double expenditure problem in the context of blockchain transactions and fiat solves the double expenditure problem in the context of acting as a medium of exchange albeit by force of law. But both fiat and cryptocurrencies are artificial goods since their supplies are not determined in the market as a function of demand and price. They are determined by outside forces, central committees or business rules in the software.

This derived double expenditure problem leading to monetary and price inflation exists regardless of the deflationary or inflationary nature of cryptocurrencies or fiat. Bitcoin is deflationary by design but when valued in fiat, the composed financial system is inflationary.

Every mining reward leads to a double expenditure problem and inflates the fiat plus crypto monetary supply putting upward pressure on prices.

Romglish

The last 10-15 years, Romanians have begun substituting English words for Romanian words when they speak Romanian. Not because they don’t have those words in Romanian, they do, but simply for the sake of substituting English words. There is no practical reason, there is no problem that it solves. Some will try to justify it with globalization and the need to speak English but that doesn’t make sense. If you need to speak English, then speak English, it doesn’t have anything to do with mixing English with Romanian. Truth is it started with adolescents to try and sound chic and cool and quirky. But now it has become a normalized way of speaking by everyone including adults and professionals in the workplace.

For example, “surfragerie” in Romanian means “living room” in English. Some people say “front room” or “sitting room” but in this Romglish language they say “living”. Not “living room”, just “living” to mean “surfragerie”. So if they are describing their apartment they might say “apartamentul meu are doua dormitoare si un living.” which doesn’t make sense to a native English speaker. It makes it sound like someone is living in their apartment.

They use the word “funny” as well but “funny” means different things depending on the context. It can mean amusing or odd. The comedian was funny or the food tastes funny. And “funny” is often qualified depending on the context. The comedian was really funny or the food tastes kind of funny. It can even be accentuated with facial expressions to effectively communicate the context. But they don’t understand the nuances, they just throw “funny” in with no qualification and no context so a native English speaker doesn’t know what it’s supposed to mean.

Advocates will try to explain that sometimes a Romanian expression has fewer words in English so they’ll use the English words instead out of convenience because saying more words takes more effort — even if it doesn’t make sense. Some will go so far as to butcher entire sentences with both languages such as: “Trebuie sa go to the magazine ca am nevoie de milk si bread. ” which is a linguistic catastrophe to a native English speaker that obviously takes more effort to construct than simply saying it in one language or the other.

They have created a new form of Romanian that only those who speak it can communicate effectively — like adolescents texting. If you are a native English speaker who also speaks Romanian then it can be confusing as hell especially in the work place. This isn’t the evolution of a language out of necessity, it’s just some cultural oddity like politics and religion. Effective and efficient communication is difficult enough and this just makes it more difficult.

Logic

There is no objective definition of intelligence or way of measuring it and if we try to construct too complicated a definition, it may take the analysis off into the weeds or down a rabbit hole where anything can be argued regardless how ridiculous. So for this analysis let’s define it as abstractly yet functionally as possible.

definition: intelligence – a relative measure of being.
definition: higher level of intelligence – existing with greater relative intelligence.
definition: lower level of intelligence – existing with some proportion of a relatively higher level of intelligence that’s proportionally less than 1.

One of life’s greatest mysteries is that humans (H) don’t know, can’t explain, can’t figure out where they came from but they came from somewhere whether it be the universe, mother nature, a god, PFM etc. Regardless the source, let’s call it a prime mover (G), humans aren’t capable of understanding the prime mover although they obviously have an origin. Therefore, it’s intuitively reasonable to assume:

assumption 0: G exists at a higher level of intelligence than H or else H would be able to understand G.

From this we have:

premise 0: The prime mover G created humans H.
premise 1: G created H at a lower level of intelligence proportionate to its own 0 > p < 1 where p is the constant of proportionality.

We programmed AI to do everything it can do but we didn’t program it to do everything we can do, it represents a proportion of our intelligence that is proportionally less than 1.

From this we have:

premise 3: H created AI.
premise 4: H created AI at a lower level of intelligence proportionate to its own its own 0 > q < 1 where q is the constant of proportionality.

From these:

G > H > AI => G is at a higher level of intelligence and created H which is at a higher level of intelligence and created AI.

Q: Can AI ever logically be at a higher level of intelligence than H, that is to say AI > H?
AI > H implies that AI created H which violates premise 3.

Q: Can AI ever logically be at the same level of intelligence as H, that is to say H = AI?

H is a function of G; pG and AI is a function of H; qpG => G > pG > qpG.

The only way for AI to be as intelligent as H, H = AI, is if q = 1 => pG = pG meaning that AI has an intelligence level equally proportionate to H as created by the prime mover but the prime mover didn’t create AI, premise 3 says H created AI. This means that H would have to have the same intelligence level as G, constant of proportionality p = 1, to create AI with the same proportional intelligence level to G as itself. If that were the case, humans would be at the same intelligence level as the prime mover and would be able to understand the prime mover and explain where they came from and it would contradict assumption 0 and violate premise 1.

Origins

“Artificial” in the acronym “AI” isn’t meant to mean that the system appears to resemble or imitate human intelligence – like an artificial tree resembles a real tree. It’s meant to mean that it is actual intelligence created artificially by humans in machines rather than by nature.

Proposition: Artificial Intelligence cannot become as intelligent or more intelligent than human intelligence.

premise 0: computers cannot evolve outside the constraints of their programming.

Computers can only execute instructions they’ve been programmed with. They cannot autonomously evolve and realize it doesn’t “know” how to do something, autonomously “reason” out a solution, autonomously “learn” how to implement the solution and autonomously alter its instruction set to add new behavior. Any sort of evolution would have to be programmed and any new behavior would have to be within the constraints of its programming. Something similar to rule-based Reinforced Learning that some AI systems use but it’s still programmed behavior.

premise 1: Intelligence is a concept created by humans as a relative measure of the capabilities of people’s minds.

Human science, medicine and psychology are discovering new things about the human mind every day. We can’t even come close to understanding the depths of our own intellectual abilities, or life’s evolutionary process so how could we program a computer to do things we don’t understand how to do ourselves? Philosophically this implies we can’t program AI with the ability to evolve to be as intelligent or more intelligent than humans because humans don’t understand their own evolutionary process and can’t quantify their own intelligence.

Is Protesting Democratic?

What does democratic mean? Depends on who you ask but I’d say it’s fair that most people perceive the concept to mean “the people” are the government – whatever that means and regardless how obvious it is that that’s simply not the case. “The people” are “represented” by politicians in a congress or parliament who were elected by a majority vote. That is to say, the will of the majority over the will of the minority is perceived as the “best”, “fairest”, most “just” way to make political decisions.

Given this ideology, they believe that if the government isn’t doing what “the people” want, then “the people” can change it by protesting. They believe protesting to be their democratic right since after all, they are the government. So a group of like-minded people who want the government to change something coordinate their efforts, raise money, collect signatures, make signs and go out in public with megaphones and make speeches and chant and sometimes they sing songs, it’s all so commercial and theatrical , at least for the protestors and onlookers.

The politicians, on the other hand, have no incentive to engage or acknowledge the protestors based on the merits of the protested issue alone. Regardless what politicians do they cannot be fired and their salaries, benefits and money from lobbyists do not depend on whether “the people” are happy or not. If politicians appear to change their political policies in response to a protest, it’s for political expedience, there are political advantages for them. For every ten protests, maybe one will offer such political advantages and affect policy, maybe.

But if “the people” are the government and their “representatives” have already been chosen to “represent the people” and “the people” are protesting the political decisions of their “representatives”, aren’t “the people” effectively protesting themselves?

And if a small number of people, a minority, successfully influence political decisions by protesting, decisions that affect the entire country, isn’t that minority imposing their will on the majority? A clear contradiction to the ideology of a majority rule as the “best”, “fairest”, most “just” way to make political decisions in a democratic system even though it’s believed that protesting and its consequences are their right in a democratic system.

So in a democracy, the majority elects representatives and a minority can influence the representatives by protesting themselves.

Politics is for the infantile and the insane.

Soldiers aren’t sent to War, they are the War.

When I was doing some work in Germany in 2016, I took the local train from the quaint little German village where I was living to the neighboring town where I was working. The train stop was outdoors right across from a large grass covered field with a couple rolling mounds peppered with yellow flowers. On a sunny day it seemed to go on forever and you couldn’t see what was on the far side at all.

I remember imagining what it must have been like during WWII when such a pristine landscape was turned into a battlefield virtually overnight. How the tanks must have come rolling over the mounds and plowed through the field and yellow flowers in an intimidating show of military might turning innocent people’s lives into fear and suffering. Bombing entire cities to rubble that just days before were hustling, bustling centers of daily life. Killing the mailman, the school teacher, parents and children alike in the name of war.

There is a very distinct recipe to turning people’s lives into fear and suffering, a procedure for destroying physical and psychological normalcy, a process for creating war. The most important ingredient is a lot of young men and women who will do anything they are ordered to do by those they perceive as authority. These are the soldiers, the tools of war, the blunt instruments who have been marinated their entire lives in patriotism, the flag and duty to god and country to the point they shit the colors of the flag. They’ve been indoctrinated since childhood that they have a duty to their motherland upon whose bosom they suckled and who, without which, they’d have nothing. They are carbon-based androids programed to follow orders and kill with extreme prejudice. They aren’t capable of critical thought or compassion because those are treasonous characteristics in a soldier.

After that you add some authority, generals who give the soldiers their orders. The generals are old men mostly, adorned from head to toe with shiny medals and ribbons, sashes and pins bestowed upon them by the powers that be, publicly announcing their heroism and patriotism which commands the greatest respect on sight. The soldiers revere the generals as almost demigods whose stature is to be admired and orders to be obeyed without question. The generals are the catalyst in the recipe that congeal the soldiers into an adhesive whole.

But the generals don’t act independently, they are following orders as well from the powers that be (TPTB). TPTB are the people and organizations that run the world, the superrich, the global governmental organizations like the UN, WHO, World Bank, IMF, NATO and the WEF and the bureaucrats that run them. They all have their agenda of increasing their global power and personal wealth and they use the generals to carry out their diabolical plans who in turn order the soldiers to do whatever their role is in the scheme and voila` war is created.

But the recipe has a fatal flaw, without the soldiers there is no war. The generals aren’t young enough or numerous enough to fight and TPTB and bureaucrats can’t be bothered with such proletarian endeavors, that’s what the disposable soldiers are for. It’s only the soldiers you see on the battlefield or occupying towns and terrorizing the residents.

As the mainstream media insists on beating the war drums louder and louder, I look out over the center of Bucharest, Romania where I live and the main thoroughfare full of cars with people living their lives, going to work, shopping, taking their kids to school and imagine the street, overnight, being filled with armored trucks, foot soldiers and tanks like in WWII Germany because some general ordered them to do so the day before. The sounds of explosions off in the distance demolishing old world buildings that have stood for hundreds of years. Terrorizing anyone who disobeys their commands, in the name of national security. How quickly life as we know it can change – as 2020 showed – due to TPTB, the generals, the soldiers and politics.

If only the soldiers had the character to realize what they were being ordered to do was wrong, the courage to refuse to obey the orders, and the honor to not disgrace themselves by doing something they know is wrong. Peace and humanity in the world begins at the bottom with the soldiers, not at the top with TPTB or their puppet bureaucrats and generals. Those people are irrelevant as is voting for them.

The Christmas Truce in WWI demonstrated how quickly and decisively soldiers can end war. The soldiers on both sides began singing Christmas carols and came out of their opposing trenches and drank wine, sang and laughed. They had nothing against one another, they didn’t even know one another so why fight? The war was suspended by them regardless what the generals said. If they could have just continued that, the war would have been over because – as the truce demonstrated — soldiers aren’t sent to war, they are the war.

Animal “Rights” Part Deux

The animal rights movement began taking shape right around the time when humanity began to master its environment and people’s lifespan lasted longer than ever before. With never-before-seen luxuries and an improvement lifespan, the homo sapiens suddenly had the time to ‘think’ and so they did.

Although human abuse was seen as customary and vastly ignored, the treatment of animals began to gradually garner the attention of those who began to believe that animals had rights, -the same ‘rights’ as humans- in the hopes that things could change for them. But what exactly are rights? Can a ‘right’ be quantified, documented, observed, and tested? Can a ‘right’ be looked at by other rational beings and -in consensus- be determined to exist? Could a ‘right’ be established to exist if we ask the 5W’s (who, what, when, where, why) of writing?

The truth is that a ‘right’ is merely a human concept, a made-up amalgamation of our left and right side of the brain going back and forth seeking to rationalize the world around us in the hopes that we can act in a way that benefits us. It is all subjective at the end of the day, and to think otherwise is a betrayal of what makes us human; our ability to process the world in a rational way by using logic and empirical thought to come to conclusions. 

But establishing the objectivity of something subjective such a ‘right’ or a ‘feeling,’ is merely the beginning. Just like how ‘rights’ are subjective, so is the tendency of humanity to treat certain species differently across a variety of jurisdictions across the globe.

In Asia, Africa, and many parts of South America, we see that dogs aren’t bathed, spayed, or neutered or even chipped, instead we see that they are simply another dish in the vast food repertories of these continents. Why? Well, because humans in these regions tend to be poor and so they need to find a cheap way to get their calories and dogs fit the description. 

On the other hand, in the west, a dog is seen as a miracle from the good lord himself and so they must be protected at all costs! Don’t you dare not having them chipped, neutered or even bathed unless you want the cops at your house. Breeding them en masse to make a profit is okay, breeding them to fight other dogs is not okay. Want to kill your dog? Not okay! Want the vet to do it for you? Very okay! 

Cows, pigs, chickens etc. are bred en masse in the west and all across the globe to create a never-ending supply for food for us, the human race. How come they have no ‘rights’?

What makes certain animals favorable and what makes other animals savory? I’m just asking ’cause I know nothing will ever change, humanity is just riddled with aging teens.

Credit Score

Most people believe they must maintain a good credit score and that having a good credit score is a social signal that they are financially responsible. The truth is exactly the opposite.

All fiat money created by central banks and the treasury is debt. When someone swipes their credit card or takes a loan, new money is created by the banking system and loaned to the consumer. It’s money that isn’t backed by anything other than legal tender laws that compel you to use it. They are just entries in a database or pieces of paper with drawings on them, for all intents and purposes, they are counterfeit. The same as you or I or any counterfeiter would do at home, the central banks and the treasury do by legal proclamation.

When the consumer pays the debt off, the principal is deleted from the accounting books, destroyed, and the bank keeps the interest. The counterfeit has been laundered and the counterfeiters keep the profits. This has concerning consequences for the banks such as: if all debt were paid off, there’d be no more money in circulation. So how do they ensure that people keep borrowing? The invention of the credit score.

A good credit score requires a perpetual state of indebtedness and repayment. The more you borrow and payback (i.e. the more interest you generate for the banks) the higher your credit score. The less you borrow (i.e. the less interest you generate for the banks), the lower your credit score. In other words, if you are financially responsible and don’t buy things you can’t afford, live within your means you will have a lower credit score like that of someone who borrows a lot and doesn’t pay it back. Those who judge you based on your credit score don’t take this into consideration. It’s a false dichotomy, you either have a high credit score or you don’t, the reasoning is irrelevant. Credit scores have become so prevalent that they are used in almost all facets of society as a judge of one’s character similar to the Chinese social credit score. Credit scores are considered when applying for a job, renting an apartment, requesting utility services, buying insurance and even a phone plan.

However, if you are so financially irresponsible that you are perpetually in debt, if you chronically buy things you can’t afford, if you live beyond your means you will have a high credit score and be considered a responsible member of society. In fact it’s fair to say that the more interest you generate for the banks, the higher your credit score. If you deprive the banks of interest income, the lower your credit score. And the banks have the government on their side. An institution $32 trillion in debt will punish you for not paying your debt to the banks. It’s a perversion that bears no resemblance to reality.

Consumers are trapped by this mindset even though they have no idea how a credit score is calculated. They just know they must be in constant debt and pay it off faithfully. Nor is one’s credit score under their control. Any business can report you to a credit bureau for anything they choose and there’s very little you can do about it. Were you late with the rent? The landlord can report you. Did you move and forget to cancel your contract with the electric company? They can report you. Businesses and those who stand to profit can unethically leverage credit bureaus to their advantage. They report outright lies as a form of extortion to pressure people into paying even if they don’t owe it and there’s nothing you can do about it.

That’s why credit cards are so prevalent and seen as a symbol of success. The gold card, the platinum card, American Express. That’s why college seniors with no job prospects receive applications for pre-approved credit cards. That’s why people swipe their credit card for benign purchases like a Big Mac or a pair of socks.

People are as addicted to their credit cards as they are to their phones. You want to get back at the bankers, the billionaires? Stop using your credit card, live within your means, be financially responsible and stop being a slave to your credit score.

Breaking Relativity


Two fundamental concepts humans have defined to describe the world around them are spatial dimensions and time. These are human concepts, no other form of life on the planet utilizes them, cares about them, they are uniquely applied by humans trying to model and understand the physical world.

We define the concept of spatial dimensions to be height, width and length. In order to quantify those dimensions, a standard measure is required that also occupies those dimensions against which we can make a relative observation.

Early civilizations used the size of someone’s feet or the length of their arm. Eventually international standards were agreed upon such as the British Imperial and Metric systems. We have tools that encode those standard measurement systems like a ruler, a yardstick, a tape measure etc.

Einstein’s theory of relativity treats time as a ubiquitous, abstract phenomenon without form or description.  Something that can only be measured but not seen or touched. I define the concept of time to be relative motion in spatial dimensions. Relative motion is essential for life like electrons around a nucleus, photons bombarding plants and nuclear fusion in the sun but it was humans who categorized those physical phenomena into the concept of time. Life did just fine for billions of years without a formal concept.

In order to quantify time, a standard measure of relative motion is required against which we can make an observation of other relative motion. Any relative motion between two inertial reference frames can be used. Early civilizations used sun dials to measure the relative motion of the earth with the sun by measuring the relative motion of a shadow with the face of the dial. Hour glasses use the relative motion of grains of sand from the top capsule to the bottom. Eventually international standards were agreed upon such as the Universal Coordinated Time (UCT). We have tools that encode UTC like a watch, a clock, a cell phone etc. A clock is a relative standard measure of time (relative motion) because the hands move relative to the face and to each other.

Time is a concept and concepts are not bendable, twistable, fungible or anything else you can do to something physical. Concepts are ideas, thoughts and time and spatial dimensions are concepts we use in order to communicate “where” and “when” effectively. A 15th century native American telling someone to meet him at the “big willow” when the “sun is directly overhead” is using the concepts of space and time in order to communicate effectively. So is telling someone to meet you at the “Hard Rock” at 2:00 PM. The concept of time makes sense since telling someone to meet you somewhere doesn’t do much good if you don’t specify when.

The theory of special relativity theorizes that time contracts which is why the speed of light is measured the same from any inertial frame of reference. But the motion of light relative to an inertial frame of reference defines a clock, a measure of time and if it is the same from all inertial frames of reference, then it defines a universal measure of time. A clock that naturally “adjusts” to relative motion to remain constant. A “God” clock.

This creates a logical fallacy. The special theory claims there is no universal measure of time so time is relative which is why the speed of light is constant as measured from any inertial reference frame. If the theory is correct, it explains the existence of a universal measure of time from any inertial reference frame which contradicts itself.

What is a Store of Value?

In economic terms, when people talk about a store of value, they’re talking about an economic good that retains its exchangeable market value in the short-run and the long-run. All value is individually subjective so exchangeable market value is the assumption that consumers and producers in the aggregate feel confident that there will be a coincidence of subjective exchangeable value between them at any time so they can use the good in trade.

This means that two people both value the good in trade independent of its current market price and are willing to trade it independent of the price of the good being traded for. If the trade doesn’t happen, it’s not for lack of subjective exchangeable value on both parts, it’s because they couldn’t agree on a price.

If they both value it but one is not willing to trade it in exchange for something else independent of the price of the good being traded for then it’s not a store of exchangeable market value. It’s a personal store of value based on personal preferences and values and it is not a medium of exchange.

For example, gold has been a store of exchangeable market value for thousands of years but certain types of gold coins have numismatic or sentimental value to collectors and they will not trade them regardless of the price offered. Those coins do not store exchangeable market value.

Whether a good is a store of exchangeable market value in the short-run and the long-run or not depends on its economic fundamentals. The short-run price of a store of value will vary but its fundamentals will ensure that it has a coincidence of exchangeable market value in the short-run and the long-run that can be used in exchange whatever that value might be at the time.

Key point: a store of exchangeable market value doesn’t mean a high price in the long-run, it means that the good will have a coincidence of exchangeable market value in the short-run and long-run regardless what the market price is at any given time.

A store of value has to be durable so that regardless what happens to it physically, the nature of the good is difficult to destroy so it can be used in exchange. An ice cream cone doesn’t make a good store of value since the ice cream will melt and all you’ll be left with is the cone. But since gold and silver are fundamental elements, regardless what form or state they are in, they’re still gold and silver. That’s true for any precious metal so precious metals are durable.

A store of exchangeable value has to have utility and value across diverse markets so that even if it loses value in one market, it still has value that can be exchanged in others. This diversity of value is what insures that the good will have exchangeable value in the short-run and the long-run. Although a bowling ball is durable and difficult for the consumer to destroy its value is limited to the context of bowling and doesn’t have diverse value in other markets. The long-run value of a bowling ball depends on the demand for bowling and bowling alone. If the demand for bowling dries up so does the value of bowling balls so bowling balls don’t make a good store of value.

The nature of gold, silver and other precious metals as natural elements make them durable and they have utility and value in a large number of markets: adorning furniture, adorning clothing, jewelry, electrical circuits, heat shielding etc. Precious metals have the sort of durability and market diversity that makes them a good store of exchangeable market value that can be used in exchange at any time.

Even if I don’t need gold or silver, given their market diversity, I feel confident that others will accept gold and silver in trade at any time so I’ll accept them as well in order to trade them later.

Is Bitcoin a store of exchangeable market value?

Is a Bitcoin durable, is it difficult for the consumer to destroy the nature of it? If you keep your Bitcoin wallet on any hardware device – computer, cellphone, memory stick, external hard-drive — and they are damaged beyond repair then your Bitcoins have been destroyed. There are certain measures that can be taken to attempt to recover the wallet but nothing is guaranteed. If you live in an area where you lose electrical power and/or Internet, cellphone connectivity then your Bitcoins cannot be exchanged and since you can’t do anything with them, they are worthless at that point in time which is the antithesis of a store of value.

Does a Bitcoin have diverse market utility and value? No, the only use for a Bitcoin is on the Bitcoin blockchain. The long-run exchangeable market value of a Bitcoin depends on the demand for people to use the Bitcoin blockchain to transact business. If that demand dries up so does the exchangeable market value of Bitcoins.

Speculative value is not the same as exchangeable value. In other words the fact that the price of Bitcoin fluctuates wildly – it lost 80% of its price in one year and 24% in one weekend — isn’t a characteristic of a store of value. The speculative value depends on the speculator not using, not exchanging his Bitcoins on the blockchain but rather continuing to hold them in hopes of recovering from the wild price dips and the price climbing in order to profit from continued speculative demand. A store of exchangeable market value must have a coincidence of market value that can be used in exchange at any time in the short-run and long-run regardless of the price.

Since people hold their Bitcoin in speculation, it decreases its exchangeable value rather than storing it.

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