“The system of banking we have both equally and ever reprobated¹. I contemplate it as a blot left in all our constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens…
…And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”
¹ reprobated – express or feel disapproval of (ARCHAIC)
Even in 1816 it was obvious to Jefferson that central banking leads to powerful bankers with too much power over our monetary systems. He also identifies that inflating a currency “is but swindling futurity on a large scale,” meaning government printing money in the present is robbing from our future.
“History records that the money changers [bankers] have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance.”
– James Madison
Money can be separated into two types: easy money, and hard money.
Easy money is any monetary supply that can fluctuate. Fiat currencies are “easy” because the Federal Reserve alters the supply of money constantly. It’s easy to print more.
Hard money is that with a stable supply. Gold falls into this category due to it’s chemical properties preventing it from oxidizing or breaking down over long time periods, and the relatively stable rate at which it is mined and used.
Gold has a long track record of being good money, this is why banks still hold it in reserve despite not being on a gold standard. Gold is their insurance policy in case their fiat currency ever fails, they still have hard money.
Fiat currencies on the other hand have a history of steadily losing value over time and in way too many cases erupting in hyper-inflationary episodes. If you understood the devastation to the very fabric of a society that occurs in a nation with hyperinflation, that simple knowledge that it could even happen once in our history to a single nation would be enough argument against fiat currencies. The horrific truth of course is that hyperinflation happens every few years to a whole new country full of people that get to find out what it’s like when money itself collapses.
Modern fiat currencies aren’t backed by gold, even if gold remains in reserve vaults, because the supply of money is ever-inflated and manipulated, it has no bearing on the amount of gold in reserve. Because of this manipulation in the supply of money, the free market is skewed in favor of short term investments to beat inflation, rather than long-term sound investments in the future. We are encouraged to borrow money frivolously, due to easy loans of money created out of thin air.
John Marnard Keynes is the father of Keynesian economics, which generally advocates for “an active role for government intervention during recessions and depressions.” However, even Keynes understood the dangers of inflation through “debauching”, or devaluing currency by endlessly printing money:
“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. The various belligerent governments, unable or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance.”
By devaluing money, governments steal from the future of their citizens for their own gain, and by Keynes’ account, “not one man in a million” could see the problem. The problem we fail to recognize is that the free market itself is distorted because the value of our money is distorted.
Therefore, the argument for bitcoin is simply an argument for a system of money with a stable supply, a system that is a good store of value, medium of exchange, and unit of account; and, it is an argument against bankers.
“Sometimes people don’t want to hear the truth because they don’t want their illusions destroyed.”