Are You Talking to Me?

 

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Why Bitcoin Really Does Represent the Democratization of Money
by Aaron van Wirdum on March 18, 2014 9

http://bitcoinmagazine.com/10724/bitcoin-really-represent-democratization-money/

In a recent bitcoinmagazine.com article referring to ‘the creation of Bitcoin and the like as the Democratization (sic) of Money’, Aaron van Wirdum attempts to address what he somewhat obliquely describes as:

‘…various explanations supporting this characterization.’

because, he says:

‘at least one of these interpretations have caused some to doubt whether Bitcoin does in fact still represent the democratization of money, or whether it has perhaps become susceptible to less democratic forces throughout the years since its inception. ‘

I suppose it must be an occupational hazard for an altcoin pumper to lean towards being cryptic! Still, it seems a little over the top to mount an argument against a ‘characterisation’ when you are not even willing to say what precisely this ‘characterisation’ is or where it comes from….

Since I was the first to use and define the phrase ‘The Democratisation of Money’ in relation to the production of altcoins and other forms of privately issued money, I can only presume this piece was written to address some of the points I started to raise in ‘The United States of Everywhere – The Home of Democratised Money’ blog four years ago and in my book ‘Crackernomics -The Democratisation of Money.’

I said in Crackernomics that the point in time would come when the advocates of privately issued money would be forced to openly (or not so openly), address key issues, first with regard to the definition of what money actually is and then the definition of ‘democracy’ and ‘democratisation’ itself.

The Democratisation of Money as I originally described it four years ago, is the process by which Anglo Saxon state institutions and financial organisations have worked to introduce privately issued money. It cites privately issued money as the cause of the Credit Crunch and the preferred Monetarist means of the financial breakdown’s resolution.

The democratisation of money is anchored in Monetarism. Impetus is given to the creation of privately issued money by the state abandoning its maintenance of the monetary commons.

Most importantly The Democratisation of Money points out that Bitcoin and Derivatives are two sides of the same coin. Bitcoin is the radical face of democratised money and derivatives its corporate face.

The Democratisation of Money analysis does not take the ‘radical’ perspective of seeing things from the point of view of altcoins and their producers. Quite the opposite; it argues that anything that does not address the wider economic and political context in which privately issued currency has come to exist is Crackernomics – which in the case of altcoins can only amount to an advert for, or a consumer review of, this or that particular coin.

Now that we are clear what the real definition of Democratisation of Money is, we can return to van Wirdum’s take on the relationship between ownership, democracy and capitalism in respect of Bitcoin.

Defining democracy in relation to Bitcoin, van Wirdum tells us.

‘it is helpful ( to who?), to recognize….two types of democracy, as distinguished by political theorists such as Cambridge professor John Dunn,….often attributed to Bitcoin,’

What are these two types of democracy identified by this distinguished Cambridge professor?

‘The first main form of democracy…..is ultimately a technical procedure, rather than a political value…….the formation of government through the ritual of elections.’

van Wirdum suggests this form of political democracy compares to:

‘Satoshi’s proposal for a proof-of-work system,’

which is analogous to a:

‘“one-CPU-one-vote” mechanism.’

You will probably know that the original Bitcoin sales pitch boasted that anyone who had a computer could ‘mine’ Bitcoin, a major attraction of the new digital currency. Bitcoin was not supposed to be a game for just the rich we were told. Unfortunately for the hopeful ‘miners’:

‘this democratic feature did not really hold up.’

Because only those who can afford large specialist computer systems, (the means of production of Bitcoin if you will), can mine the remaining Bitcoins. Anyone with an ordinary computer has long since been forced out of the game.

But not to worry because:

“one-CPU-one-vote” mechanism should hardly be regarded as a fundamental ideal bolstering Bitcoin in the first place.’

Bitcoin was ‘democratic’ in the sense that everyone could get a piece of the action, in theory. Only in reality, it turned out that only everyone who could afford it could get a piece of the action. So much for this version of democracy and by the way:

‘this characterization of “democracy” as “majority vote” is a quite limited interpretation of democracy’

anyway!

Since it turns out that ‘one man one vote’ and ‘majority rule’ etc are not really important parts of democracy, van Wirdum suggests we move onto:

‘the most important of the two (types of democracy), …the ideology of democracy, ..(which)….consists of various Enlightenment ideals.’

And these ideological enlightenment ideals would be?

Equality, popular sovereignty and self governance

Equality is defined by van Wirdum as:

‘equal rights under the law, freedom of speech and property rights.’

In this respect Bitcoin is superior to standard state money because:

‘no one person has more influence over the protocol than anybody else, nor can anyone bend its rules to his or her own advantage.’

To make it absolutely clear:

‘Not even the inventor, Satoshi Nakamoto, or huge stakeholders, such as the Winklevoss twins, are able to change the Bitcoin-code without reaching a consensus among users.’

Well that certainly sounds very reassuring on the surface. But on reflection what does this really guarantee the user of Bitcoin that state currency does not?

Currency markets are manipulated to create desired outcomes every day without affecting the basic ‘protocols’ of individual national currencies. That is why rich and powerful people are always very keen to promote what they call ‘free’ markets- because ‘free’ markets are the means to circumvent political control and exercise unfettered economic power. Currency manipulators don’t want the power to change the design of the five pound note or the way it is printed – what do they care so long as they have control of the markets the notes are traded in?

van Wirdum goes on to offer further bits of nonsense like:

‘arbitrary confiscations of wealth – as seen in Cyprus – are simply out of the question as long as bitcoins are stored securely.’

-the same is true of paper money- if you hide it under your mattress!

However, on a more disturbing note he suggests that the freedom to anonymously donate to a political organisation (through Bitcoin) is:

‘a pure and therefore very equal form of free speech if you will.’

This is explicitly the argument that was made in ‘ Citizens United v. Federal Election Commission’ the USA law that formally recognises corporations as people with the ‘rights’ to this kind free speech that actual people have. As a consequence the USA has secretive organisations funded by billionaires dominating whatever political discourse still remains..

Second on van Wirdum’s list of enlightenment ideologies is Popular Sovereignty defined by van Wirdum as:

‘ ..the legitimization of the rule of law by the consent of the governed.’

Contrary to what is implied by van Wirdum, this is ‘popularity’ in the sense of popular (Pop) music. ‘Pop’ music is not popular music because it is made by the population, it is music most often listened to by the the population. It is popular in the way it is consumed, not the way it is produced. The same thing is true of popular sovereignty. It is not power popularly exercised by the public, it is domination popularly accepted by the public:

‘And regardless of the legitimacy or desirability of this contract regarding present-day nation-states, central banks run their operations with questionable consent at best.’

‘they (are) purposely removed from the democratic political process’

This removal of the control of money from the democratic political process is a fundamental condition for the Democratisation of Money. Democratic politics justified the traditional monopoly of control that the state exercised of the issuance of money. It was therefore necessary to undermine the democratic state and its monopoly on money issuance to justify private money issuance.

This happened because there are no longer any ‘free’ markets outside of right-wing rhetoric. Since the state controls the economy, control of the state is control of everything. Based on this realisation Monetarists created ‘independent’ central banks across the western world. (That is independent from any truly oppositional political party that might get elected by accident).

The Monetarists have created an Independent Democratic Republic of Financial Institutions and Banks that no longer recognises the legitimacy of a nation state monopoly on issuing money.

This independence from political control was symbolised by the revocation of the Glass-Steagall Act in the USA, widely accepted as the legal doorway opened to the mass production of Derivatives- corporate democratised money.

And what of Bitcoin?

Bitcoin, on the far opposite side of the spectrum, quite literally exists because of the consent of its users; if they did not consent on the rules of the protocol they would not use it in the first place.

No more than the drug trade exists by virtue of the consent of junkies. The drug trade benefits pushers and they promote it. The need for drugs is a need of the desperate, in the same way that the need for your own currency is the need of desperate victims of corporate democratised money and Monetarism.

We come to the last and greatest gift of enlightenment ideology to civillisation: Self Governance which is:

‘the most important political value underpinning modern Western democracy’

Given its fundamental importance to modern western democracy it seems reasonable to ask where this principle has ever actually been practiced? This point is obliquely recognised by van Wirdum himself:

‘With Bitcoin, we now for the first time don’t need to delegate a small group of people to govern the rest, but we can instead transfer this power to universally verifiable open source code, written by and for the people. This is a truly revolutionary form of self-government.’

If ‘self governance’ is truly so fundamental to western democracy why would its introduction through Bitcoin be so ‘revoloutionary’?

Preferring not to dwell on contradictions like these van Virdum plows on:

‘the organizational structure of open source programming is, by far, the best way for common people to organize themselves ever invented.’

because, he tells us, people are:

‘free to contribute to the rules – the code – of the system,’

This is really like saying that members of the public are free to go out into the streets and work for nothing picking up litter for the good of the community. Sounds like a great idea, so how come nobody does it?

And after all this we finally come to the crux of the matter:

‘some of the smartest economists alive today have argued that ….money should be carefully managed by experts in order (to) (sic) stabilize the value, for instance, or to guarantee economic prosperity. According to these economists, if the people are supposed to have any say in this regard, it should be a very indirect influence at most.’

Well this observation at least is unarguable- So what should we do about it?

As I explained above Capitalism has reached the stage where it is completely dependent upon state support and regulation. This means that no ECONOMIC strategy is possible for managing capitalism in the future-only a POLITICAL one. If this is true then the altcoin movement is a political movement not an economic one. If this is true then it is subject to political forces and not economic ones. That the altcoin movement attempts to define itself in economic terms is simply a political strategy.

What are the consequences of this political strategy? It takes the victims of Monetarism and corporate democratised money (derivatives), away from the source of real power. It takes them away from the place where they can have a real affect on the powerful. In effect it concedes the hijacking of the state by Monetarist interests and suggests that the dispossessed should leave and try to start up a new system somewhere else. Does anyone seriously believe that these powerful interests will allow the altcoiners to develop an alternative system free from their control? It is the Monetarists who began the Democratised Money experiment in the eighties and nineties with the creation of Derivatives! The world we see before us today all of it, is a Monetarist project.

With a final flourish of his ‘radical’ credentials van Wirdum tells us that:

‘up until the 1800′s, the term “democracy” was actually a fringe word, only perpetuated by the “insouciant and incorrigible dissidents,” as John Dunn put it: “Those who chose to do so placed themselves far beyond the borders of political life, at the outer fringes of the intellectual lives of virtually all of their contemporaries.”

Whether the idea of ‘modern’,’ western’, democracy began life as the rhetoric of fringe radicals or not, ever since it was adopted by the elites of the Germanic Cult of Capitalism it has been used as a justification to steal, murder, subvert and oppress countless billions across the world. Not least among these victims of ‘modern, western, democracy’ have been the German/Anglo Saxon plebs who supported the ‘revoloution’ and who have since found themselves packed like animals into cities, reduced to selling their very selves to survive. And their children made to applaud the ‘freedom’ and ‘democracy’ that put them there as sheep and cattle grunting and hooting in praise of the butchers knife. And all in return for a chance to put a little cross next to the name of the master of their choice.

Two hundred years ago anyone with a shred of intelligence knew that the radicals and visionaries of ‘democratic capitalism’ that promised so much and delivered so little would either be in madhouses or palaces by the time everyone else realised the truth about what they offered..

As van Wirdum says:

‘Sounds remarkably familiar, doesn’t it?’

Yes it does.

 

The Promised Land

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And did those feet in ancient time
Walk upon England’s mountains green:
And was the holy Lamb of God,
On England’s pleasant pastures seen!

And did the Countenance Divine,
Shine forth upon our clouded hills?
And was Jerusalem builded here,
Among these dark Satanic Mills?

Bring me my Bow of burning gold;
Bring me my Arrows of desire:
Bring me my Spear: O clouds unfold!
Bring me my Chariot of fire!

I will not cease from Mental Fight,
Nor shall my Sword sleep in my hand:
Till we have built Jerusalem,
In England’s green & pleasant Land

William Blake

As I have explained previously, a new bench mark Bank of England interest rate of 3-4% is required to service democratised money in the western developed economies. The savings and investment market in Britain is being structured around this new reality.
What this means in political terms is the ongoing implementation of a two state solution similar to the one we can see being undertaken in Israel/Palestine.

Israel/Palestine is one territory but the Two State Solution envisions two administrations controlling two different populations in two strikingly different ways:
The first state is the Occupying state. The enabling state. This state enables settlers and those who take over territory. It protects occupiers and attacks their enemies on their behalf.
The second state is the Occupied state. The repressing state. It represses those it claims to represent. It strips them of historical rights and makes their enemies case against them.

Whichever state appears to have the upper hand at any given moment does not really matter, since both serve the interests of the occupiers, one directly and the other one indirectly.

We can see clearly with the latest budget from Chancellor George Osborne how the two state solution (Financial Peace Process), is being enacted in Britain.

First the enabling state: Chancellor of the Exchequer George Osborne presided over the unveiling of a series of ‘sweetners’ for his core constituency including:

The promise of Government bonds to be issued at a relatively generous yield.
A loosening of restrictions on pensions and the annuities that investors were previously forced to buy to justify the generous tax benefits they received
And a relaxation of the conditions surrounding ISA’s – which are a government sponsored tax free saving scheme.

If there ever was a time to tie your colours to the mast of your core constituency then surely the budget settlement one year before an election is just such a time. The financial emergency is supposed to be over, presaging a return to business is usual, so return of interest rates to the long term trend average of around 5% is what we would expect Osborne to trumpet.

But as Osborne made his offer he explicitly reiterated that the economy is permanently subject to new conditions. Interest rates won’t be going up to historic levels EVER, if the the Monetarist state has anything to say about it.

We will return to interest rates in a moment but for now let us look at the second state; the occupied/repressive/welfare state:

In the budget for this state we had the standard threats against benefit recipients and the ongoing plan to shrink/abolish the welfare state – branded as ‘austerity’. Nothing much particularly new there, then.

Then comes the revelation that the territory of the second state is to be permanently limited for the first time. This means is that a cap is to be placed on welfare spending no matter what. If one area expands another must be correspondingly shrunk to maintain the overall level of expenditure. This builds a ‘peace wall’, ( just like the Kosher Kurtain in the occupied territories), around the second/welfare state.
http://www.bbc.co.uk/news/uk-politics-26743802

And then there is the news that a startling 96% of new mortgage buyers are fixing at somewhere around 3-4.5% – the new de facto interest rate. Here is the core of the Monetarist planned economy- planning through the allocation of credit. http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10721260/96pc-of-home-buyers-fix-mortgage-rate.html

The more people using credit, the more ‘planning’ is taking place. This is the consequence of Monetarist pressure for a move away from discretionary based spending to credit based spending- the end of the ‘consumer economy’; the end of freedom for citizens of the second state to spend not just on what you want, but when you want.

And it seems that 96% of new mortgage borrowers don’t need to be told to get in line, they are doing it already! Despite the fact that media outlets continually tout the Bank of England line that interest rates will not rise, borrowers are willing to pay a premium to avoid risk in the only way that has been left open to them, by Monetarist planning. Until relatively recently many British mortgage borrowers preferred to buy floating variable interest rate mortgages in preference to fixed rate mortgages. So this is evidence of a fundamental change in attitude

At the same time as a rise in fixed rate mortgages, we have the news that inflation has actually fallen below the governments target of 2%. A fall in the cost of energy is expressly cited as the main cause of this. What could have caused such a fall in the price of energy?

The USA recently made a surprise ‘test release’ of strategic oil reserves emphasising they will do anything they can to prevent sudden energy inflation, (caused by among other things the situation in Ukraine), getting out of hand.
http://www.reuters.com/article/2014/03/12/us-usa-energy-reserves-idUSBREA2B12V20140312

In Crackernomics I specifically cited manipulation like this as a feature of the monetarist planned economy.

However, resource staples like food that are not subject to direct government control continue to rise, apparently due to a number of unforeseen ‘one off’ factors. For instance a rise in the price of pork due to porcine epidemic diarrhea in America is an example of this.
http://www.foxnews.com/us/2014/01/11/widespread-pig-virus-threatens-to-bump-pork-prices/

It is the fall in the price of manufactured commodities (deflation), that is offset against this resource inflation producing the overall fall in inflation. This deflation in manufactured commodities is further evidence of the end of the consumer society as I have argued before

So lets get back to those extra low interest rates and the effect that these have on the interests of Osbornes core constituency. Surely low interest hurt the occupiers (Conservative voting pensioners with savings to invest), so why go ahead with it? Well we can see things a little more clearly if we refer again to the two state solution in Israel/Palestine

The ‘handing back’ of occupied land as part of the peace process (areas in the West Bank and the Gaza Strip), may upset some individual settlers but it will continue because it is fundamental to the construction of the final overall ‘peace’ settlement.
The dirty secret behind the Two State Solution trick is that the occupiers don’t actually have the physical power to overwhelm their victims outright. If they did you can bet they would have done it a long time ago. Instead their purpose is to wear down the people of the occupied state gradually until they accept their inevitable demise.

So how will they (and we), know when the Monetarist/occupiers have achieved their final objective and won?

In Britain the big prize is the NHS.

In the territory of Israel/Palestine it is the al Aqsa Mosque on the Temple Mount.

Just as the most fanatical Jews goes to pray by the Wailing Wall so the most right wing Monetarists came to pray at the Temple of the NHS (safe in our hands).

Just as the Zionists claim they want to share the Mount, so the Monetarists say they want to share the healthcare market.

Just as the Israeli ‘defense’ force make it increasingly difficult for Muslims to pray at the Dome of the Rock so it is harder and harder to get treatment at your NHS hospital.

Reducing the NHS to rubble is for the Monetarists like reducing the al Aqsa mosque to rubble for the Zionist Jews.

Proof that they have reached the promised land.