*In this multi-part special edition of The Freedom Analects, we will be featuring the excellent written work of author John Vallis titled “Money Messiah: God, Bitcoin, and The Evolution of Consciousness.” This essay beautifully depicts the deeper aspects of value and money, their indispensability to human action, and demonstrates why corrupt money is such a destructive force. John’s original work is available in its entirety here.
The Corruption of Money
If money is what transmits the information which mediates the optimal structuring of value hierarchies between people, and we accept that improper, inaccurate or corrupted information creates inharmonious, disordered, and ultimately destructive ‘pathological’ hierarchies, then the most important question in the human social realm becomes;
‘What is the most high-fidelity conduit for the information contained in prices, across space and time?’
Simply, what will best preserve the information which money ‘transmits’?
To determine this, we must be aware of what ‘corrupts’ money:
Anything that inhibits, dilutes or alters the ability of the individual to express value (their value hierarchies) to others, or the ability of the market to interpret, integrate and communicate it in unadulterated form, as intended, in perpetuity.
To achieve this, the market will attempt to ‘ground’ the money in a commensurate sacrifice to that which it’s attempting to represent — our own.
That is, it will seek to instantiate an inviolable (as possible) limitation. After all, our value-hierarchies determine, and are determined by, our sacrifices, and the integrity of any market is determined by the degree to which changes to individual and collective value hierarchies are predicated on the same process.
Sacrifice is the ‘cost’ for being able to re-order the hierarchies, as it were, and so sacrifice is used to instantiate the mechanism which does so. Therefore, the less ‘sacrifice’ in the money, the more susceptible to ‘corruption’ it is.
The most common form of corruption in money is ‘inflation’ — an increase in the supply.
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Money supply inflation is not necessarily damaging to market signalling or fairness, per se.
For example, if all new issuance was (magically) spread out evenly among all market participants, then the relationship between the money in circulation, and all goods and services, wouldn’t change (only the nominal prices would). Of course, there is no rational reason to do this, as it confers no benefit to anyone. In practice, inflation is simply a means of re-distributing the benefits which money confers, by allocating supply increases unevenly, and in doing so, dispossessing those who’s relative share of the total supply of money has shrunk, and advantaging those who’s has grown.
The power or privilege to do this is known as ‘seigniorage’: The benefit derived from the ability to create new money, and spend it into the market first (before it’s dilutive pressure causes general pricing to adjust). It’s effectively the profit margin on the production of money, and is always dilutive to some degree, but much less so for ‘market-based’ monies, which generally have low ‘margins’, due to the cost (sacrifice) required to create them.
Fiat (meaning: ‘by decree’) money, on the other hand, is a near 100% profit margin, and represents pure appropriation of purchasing power — the primary benefit to the issuer of such money, and its ‘raison d’etre’.
Fiat money allows for the manipulation of value hierarchies without any sacrifice by the issuer. It permits absolute privilege to those who impose or coerce its use, to re-allocate the work of ‘normal’ market participants in whatever ways and amounts it pleases.
It derives its ability to do so by violating the property rights of money holders, forcing them to relinquish the privileges earned by the sacrifices they’ve made, and involuntarily give them up to one who has not earned them through ‘market-sanctioned’ action. This is the antithesis of the very notion that money is a ‘representation’ of our ‘sovereign selves’, and what caused it to emerge as a useful tool in the first place.
This kind of money is not only unfair, but it’s also extremely detrimental to the market’s ability to identify what is most valued, and allow natural incentives to coalesce around them accordingly — that is, it corrupts its truth-finding function.
It fails to recognize that the best information which a market can receive, is generated via each individual’s interaction with their environment. It is those actions which, communicated to and through the market via prices, allow for the proper adjustment of the market’s value hierarchies, with and to the conditions of the natural world, and the choices of each individual, such that an optimal equilibrium may emerge and be maintained.
Each individual is, in effect, a data-gathering and sharing node, spread out all over any contiguous market, communicating truth about their interactions, sanctioned and ‘verified’ by the cost (time/energy) required to take them.
Fiat money dramatically disrupts this, as the issuer presumes the mantle of ‘all-knowing’ entity, and proceeds to re-order the value hierarchies of the market in accordance with, at best, their eternally limited data, and at worst, their imperfections, incompetence, self-serving behaviour, and (often) deluded wishful thinking — contrary to the emergent wisdom generated by the voluntary interaction of individual market participants.
Therefore, corrupted price signals cause market participants (and the market as a whole) to be ‘lead astray’, not only in relation to their own goals, but also in relation to optimal congruence with the broader environment.
The outcome of this is not solely an increasing disharmony between individuals, the market, and the natural world, but also a tremendous and undeserved concentration of power. Such a market becomes oriented around a corrupted and unjust ‘center of gravity’.
This is how pathological hierarchies are created and perpetuated through ‘the money’, and how they lead to the decay and degradation of both the socio-economic system, and inevitably, the individual who derives their signals for behaviour from it.
Peterson:
“The lie weakens the individual — who no longer extends the range of his competence by testing his subjectivity against the world — and drains his life of meaning.”
Here, Peterson is referring to someone telling a lie (I think), but I believe it’s equally valid with regards to an individual predicating their behaviours on lies (corrupted signals), as both generate distorted feedback, and therefore false perception and misguided action.
Peterson:
“The record of human cruelty and folly is too hideous for anything but the sense of a corrupted will to come near a diagnosis.”
This is what fiat money ultimately does. It corrupts (and often breaks) the will of the individual, as they either succumb to perverse incentives, or increasingly lack the proper information and feedback to pursue actions maximally congruent with their environment (social and natural).
Furthermore, their sacrifices are more and more felt to be in vain, as their accumulated reserves are siphoned away. The world around them increasingly takes on the appearance, or at least instills the sense, of something which has departed from that which invites and allows the human soul, or the better aspects of ourselves, to flourish, and instead creates an environment of confusion, deprivation, fear, division, anger, oppression and conflict.
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Any astute observer will see this represented in the many ‘social problems’ plaguing our world today. However, only a select (but growing!) few are beginning to diagnose it properly, in seeing that the primary root cause is indeed — ‘the money’.
Fiat money, through the unjust imbalance of power it creates, and the distorted information it perpetuates, fosters increasingly pathological hierarchies, less and less capable of keeping the encroaching forces of ‘chaos’ at bay. This scenario will lead to increasingly tyrannical measures to maintain order, as it always does, when the true cause of chaos is misdiagnosed, or willfully ignored.
Even in the most ‘democratic’ and ‘free’ societies, false money permits, even necessitates, ever greater centralized control. As a market’s equilibrium is increasingly disrupted by such intervention, more intervention is, counterintuitively, thought to be required. The less markets are able to function freely, and the more decisions are imposed upon it by the central power, the more ‘tyrannical’ the society will become.
As money is the primary coordinating mechanism for human socio-economic interaction, the more it’s subject to abuse and deterioration, the more another mechanism must fill the void — that mechanism is (authoritarian) control.
The acceleration towards such a circumstance occurring in our current time should, in this light, come as no surprise, and should serve primarily as a signal that ‘the money’ is breaking under the weight of its abuses and unjust premises.
In Part 9, we will see how Bitcoin—the world’s only incorruptible money—may be the only way to cleanse pathologies from human hierarchies…
Thank you for reading Money Messiah (Part 8).
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Money Messiah (Part 8)