CENTRAL PLANNING & PRICE-FIXING

History is wrought with all sorts of economic distortions resulting from currency debasement by central planners, specifically central banks (or what the Bible described as money changing temples for usury).

Central banks have not only printed notes separate from Treasury without any intrinsic value, but have done so using citizens as collateral to back those notes.

In other words, in a central planning system, you don’t actually own the notes you use to make purchases or borrow on credit — you borrow against your own time, labor and right to life (your birth certificate). This construct exists whether you live in a capitalist system, where corporations own the commerce systems, or in a communist system, where governments own the corporations.

To add insult to injury, personal income taxation is a debit on your time and labor under the promise of subsidizing public utilities, such as social security, pensions and the construction of roads or schools. Problem here is, the vast majority of these taxes are used as funds which aren’t properly ledgered, and/or are squandered for nefarious if not downright criminal activity. Hence the shortfall in off-balance sheet activities in the many trillions of dollars, as central banking debt accumulates to irrecoverable heights.

To make matters worse, central bankers think that they can now reauthorize minted notes by digitizing them as automatic debits on your time, your labor and your health assessments. They call these digital currencies, or CBDCs (central bank digital currencies), but what they really represent are just a way to rehypothecate interbank debt, at the cost of unsuspecting taxpayers.

As ridiculous as this sounds, it is not surprising given that they are governed by their own laws that bypass constitutional mandates, and essentially have been using their reserves to buy up what should be public and private assets, at will. What was formerly known as “quantitative easing” to print money endlessly to somehow redistribute inflation, is now known as cloning, in which reserve notes are used to purchase and hold assets such as stocks, bonds and real estate holdings, unbeknownst to the public.

Meanwhile, appreciation for gold and silver has been driven out of the public consciousness. Gold’s price is fixed in back rooms by a handful of people, while central bank notes are interest rate adjusted with no real handle on asset valuations. In either case, there is no real means to distribute their inflation evenly, or redistribute their value to “common people”.

The recent silver squeeze is a classic example of how market forces turn on each other in order to make up for the delta in price reflections, or more accurately, price refractions, as in the case of the devalued USD. With bullion supplies bought up and hoarded, silver notes (IOUs, futures, etc.) go to the highest bidder, regardless of who is trying to “even out” the market. Otherwise known as backwardation, conditions whereby traders outcompete each other create higher prices in shorter timeframes.

With little understanding of what money or currency actually is, or its origins, the folly of politicians, bankers and so-called financial “experts” carries forward with patchwork monetary policies and outright financial fraud supported by the institutions we are supposed to trust.

There’s a reason why the rich are getting richer, the middle class is a fiction of the past, and the poor are more or less considered obsolete in economic reform efforts.

There’s also a reason why cryptocurrencies are not a solution in the ways they are thought to be.

THE CRYPTOGRAPHIC GAP

Most cryptocurrencies are thought of as instruments which can solve for things like stores of value and double-spends.

This is a half-truth.

As Lietaer pointed out, any currency that has physical use and physical weight as a utility does not need a store of value to determine its worth, whether it is tethered to a network or not.

This is because any real currency at once has physical uses to demarcate its value and transferable uses to manage its ongoing value. That is determined by its real uses in the real world, primarily free of speculation.

In other words, its entropy is not confined to the conditions of a market that cannot account for any and all factors driving its supposed intrinsic value.

You and this author can agree that food is necessary to eat, water is necessary to drink, and energy is necessary to stay warm, and we can discern their intrinsic value, whether we use cash, credit or tokens.

With stores of value, trust is not thought to be necessary, or is treated as a given, because of the network itself. Yet, over 60% of online identities are synthetics or fakes. Which means you take on inherent counterparty risk by simply transacting within or across a network.

This article explains the work being done to authenticate and verify a real human being’s identity through SSI (self-sovereign identity).

With double spends, identities can be duplicated with wallets, and custody can be held by various parties, and so verification and provenance can be questionable, depending on the architecture of the blockchain or distributed ledgering system you are using.

Reality is, you can also route a theft of wallets, or canvass a network to fake transactions, which renders a double spend obsolete in its entirety.

Stablecoins are also the stuff of monetary lore, if you consider that very few if any have stable pegs to other currencies that aren’t volatile, or speculated upon. The more classic examples involve coins that are tethered to FIAT, or tethered to other non-fungible assets that have indiscernible value in the real world.

So, there are still not the proper protections in place that are required to actually avoid what is thought to be stores of value or avoiding double spends.

Neither FIAT, nor precious metals, nor cryptocurrencies, nor stablecoins represent these protections at scale, not yet at least. This is mostly because of market competition that emphasizes the arbitrage of trading on yield (volatility), rather than placing the focus on stabilizing the value of the units of account over time, and across networks.

If you still don’t accept these truths, then consider this: The FBI is among the largest holders of Bitcoin in the world.

With that said, new approaches to designing protected, stable instruments are prescient, such as the case with quantum tolerant currency.

SOUND INSTRUMENTATION

Alas, there are many silver linings (pun intended) readily available to us.

As mentioned earlier and in other posts, the most important element in managing economic health is amortizing risk in real-time.

In doing so, it is also the case that the greatest hedge against flationary risk (inflationary, deflationary, reflationary and disinflationary), and specifically hedging on inflation, is in the responsible management of physical or fungible assets.

Why is this the case?

Because we all need to eat food, drink water and use energy without unnecessary interest rate adjustments that commodify the time and labor we put into their production, and ultimately, the consumption of goods, or the use of services.

Programmatically, this author has outlined the role blockchains and ledgers play in creating resource independence, when designed properly.

This author has also outlined the mechanics of how to create non-flationary value with real resources or assets using cryptographic units of account.

To summarize what this looks like in terms of sound money, we should consider:

• the issuance of money should be stable from the onset
• the trading of currency should not require a store of value
• the exchange of goods and services for barter should not be held back by speculative measurements of value

This is a stretch in logic given our dependencies on monocultural systems of finance and economics for all these years, but the time has come to get back to real fundamentals.

It is also the case that blockchains, ledgers and quantum technologies do in fact provide some of the fundamental programmatic logic for all of this, but they are not yet designed for non-flationary value.

This is an enormous opportunity space for those who are looking at the design of cryptographic systems that take social, ecological and financial parameters into full account. This is also where the evolution of smart contracts will reveal their value in spades.

NON-FUNGIBILITY AS AN ASSET HEDGE ON INFLATION

With all the buzz surrounding NFTs (non-fungible tokens), the hedge on inflation is mostly overlooked. A lot of this has to do with the inflexibility of smart contracts, such as ERC-1155, which is offered on the Ethereum blockchain.

NFTs are basically serial numbers that establish provenance (ownership).

Anyone can mint an NFT, but not anyone can secure a scarce asset using an NFT.

This is a critically important distinction.

Case in point: Most NFTs are used to trade or exchange an asset that actually belongs to a holding entity, with a central database, not a blockchain, as most people think they do.

Here are screenshots of how many NFT serial numbers redirect to centralized servers with a simple right click.

In our case (RAIR), we have developed a node-level architecture in which the NFT is the actual key which locks and unlocks the asset, while acting as your bank, your cloud and your unit of account.

This stack establishes the provably unique provenance for each digital copy, while providing the security needed to protect the asset from duplication or seizure, as well as a resell mechanism for monetizing the asset per its issuance (number of copies that the asset owner or sharer sets).

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://goonth.medium.com/the-case-for-sound-currency-b52da8148131?source=rss——-8—————–cryptocurrency