If You Want to Limit the Power of the Super-Wealthy, Stop Using their Money

Many well-meaning people want to limit the wealth and power of the super-wealthy, i.e. the Financial Aristocracy/Oligarchy. (For more on the modern class structure, please see America’s Nine Classes: The New Class Hierarchy.)

Reformers have suggested everything from a global tax on wealth (Piketty) to publicly owned banks to limiting the pay to play circus of campaign contributions.

None of these will change the power structure or limit the super-wealthy. as I explained last week, If We Don’t Change the Way Money Is Created and Distributed, We Change Nothing. The super-wealthy will either move their capital elsewhere, derail the reforms, or have their political lackeys water the reforms down to the point they are nothing but a politically useful illusion of “change.”

The only way to systemically limit the power and wealth of the Financial Aristocracy is to stop using their money, i.e. central-bank issued state currencies. Central-bank/state issued money is borrowed into existence and made available to financiers and the Financial Aristocracy to buy up productive assets.

Central states borrow some of this money to fund their bread and circuses welfare programs that keep the restive underclasses distracted, insecure and dependent on the state, but none of this actually changes the ownership or capital structure of the economy; it just makes the masses complicit in the status quo.

Though the vast majority of us have little opportunity to use money that isn’t issued by central banks, that’s changing. Bitcoin is the most well-known example of a non-state, non-central bank form of global money, but there are many more in use or in development.

The state/central bank monopoly on issuing and distributing money is (along with war-making and coercion) the state’s most jealously guarded monopoly.The state– which includes the largely invisible Deep State, the central bank (Federal Reserve) and the visible machinery of government–retains the sole right is issue money in whatever sums it chooses and to whom it chooses because the jig is up if the state loses the power to reward its Financial Aristocracy cronies and fund its own programs.

A nation-state in which the populace is free to use a variety of competing currencies is a nation-state in which the state can’t fund itself with newly issued funny-money or distribute new money to the super-wealthy.

In a nation that uses competing global non-state currencies, the state must live off tax revenues and bonds sold in the open market, free of central bank collusion.

In a nation that uses competing global non-state currencies, the state cannot generate inflation by over-issuing money.

In a nation that uses competing global non-state currencies, the central bank loses the power to enrich the super-wealthy.

Isn’t it obvious that whomever controls the digital “printing press” of new money controls everything? Conversely, if this power is stripped away from centralized states and their banks and decentralized (as I outline in my new book A Radically Beneficial World: Automation, Technology and Creating Jobs for All), the essential mechanism of transferring wealth to the super-wealthy and their political lapdogs (Clintons et al.) is broken.

States will naturally suppress competing currencies and outlaw any threat to their monopoly. That bitcoin is not yet illegal in the U.S. is a surprise. What isn’t a surprise is that Goldman Sachs has sought patents on its own crypto-currency:Goldman Sachs wants to create its own version of bitcoin. (via Drew S.)

Those who believe states can never lose control of their currency should consider what happens in hyper-inflation. When states debauch their currencies and push them over the cliff, people abandon the currency in favor of money that holds its value and acts as a means of exchange.

In such a setting, a non-state digital crypto-currency currency is a practical solution. Gold and silver are always money, but they have their own risks and limitations (“my lead will take your gold” etc.). When official money loses its purchasing power, even phone-card minutes can act as money.

As farfetched as it may sound today, I suspect there will be a ruthlessly Darwinian sorting of currencies within the next 10 years. Nations with broken national currencies that adopt non-state competing currencies will outperform nations that cling to centralized enrich-the-already-super-wealthy model of central bank-issued currencies.

The only way to reverse rising inequality and break the power of the super-wealthy Financial Aristocracy is to stop using their central-bank issued national currencies. When the world ceases to use the Financial Aristocracy’s money, their power to accumulate more wealth at the expense of everyone else will disappear.

Everyone who is convinced that the current status quo is permanent and unbreakable should consider what happened to the super-wealthy private landholders of the Western Roman Empire. When the empire’s power to coerce broke down, the super-wealthy vanished into the dustbin of history.

Few believed that possible in 475 AD, but history isn’t a matter of belief. Believing it isn’t possible doesn’t stop history.

Of related interest:

Is This How The Dollar Gets Replaced?

Why Bitcoin May Solve This Age-Old Economic Paradox

My new book is #5 in Amazon’s Kindle ebooks > Business & Money > International Economics: A Radically Beneficial World: Automation, Technology and Creating Jobs for All. The Kindle edition is $8.45, a 15% discount from its list price of $9.95.

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  • jadan

    It is within our capability to have a government responsive to the will of the governed. This is not our condition today. We have an oligarchy. Polls tell a sad story of the will of the people constantly thwarted by the corrupt and dysfunctional political apparatus. Vote counts are manipulated. Before we adopt a financial system that is not a monopoly of the rich, we have to first fix the voting system so that every citizen can have confidence that his or her vote is fairly recorded. There is no other way to create a government that reflects the will of the people. Our computer voting system is rigged. No American can have confidence that elections are free and fair. Americans have little confidence in their government. Our political genetic code contains the seminal idea: “government that governs least governs best”. But for generations now, we have not had the knowledge that we control our own government, because it has been co-opted by various big players.

    Eliminating the money monopoly of the rich ( the central banking system ) is the next step, not the first one. Unless we have a functioning democracy that is transparent and accountable, we’re finished, doomed to some type of fascist oligarchy. Bitcoin and such non-government issued currencies will not do it. Those who fundamentally distrust government, such as the author of this essay, have an undying belief in a fantasy called the “free market”. Smith delights in visions of the ruthless Darwinian battle of the cryptocurrencies, not to mention the struggle of people ruthlessly competing in this Conan the Barbarian vision of reality. The fact is that if a people cannot create a governmewnt over which there is democratic control, there is no hope anywhere else, certainly not in a free fuck-em-all market situation.

    • ahuxley

      I agree and would like to add that I see things getting much worse and quickly.

      Even Smith himself alludes to this when he opines, “That bitcoin is not yet illegal in the U.S. is a surprise.”

      It can and will be made illegal when the ruling class sees fit.

      • jadan

        Bernard von NotHaus, architect of the Liberty Dollar, was arrested in 2007 and the competing currency operation was shut down by the FBI and Secret Service. They were minting real silver coins and competing with the Fed. So far as cryptocurrencies go, bitcoin is in no danger of being made illegal in the US. It is illegal in just a handful of countries around the world, such as Ecuador and Bangladesh. Some regulate it, most do not. Don’t know why Smith thinks it displeases the Fed. Seems the Fed only disapproves of gold & silver as a real threat to the hegemony of the FRN.

        • ahuxley

          Jadan, thanks for the thoughtful reply.

          I’m not sure why you believe, “…So far as cryptocurrencies go, bitcoin is in no danger of being made illegal in the US…”

          Bitcoin definitely does displease the FED. As a matter of fact it gives the banking oligarchy nightmares because they cannot control it’s value. That’s the name of the game, “Control Of Value”
          The Global Banksters will, as sure as the sun will rise tomorrow, declare Bitcoin ILLEGAL.
          For this reason I WILL NOT buy one penny’s worth of Bitcoin.

    • Ed

      There are two types of people on this planet. The ones who want to be left alone and those who won’t leave them alone. After you achieve your “government responsive to the will of the governed.” Will you leave those who don’t want to be governed by your “responsive government”, alone?

      Reality Check
      “First and foremost, Hitler saw the State as the ideal form of social organization; managed by people dedicated to making it finer and stronger. Wrong! He failed totally to get his premise right, i.e., that individual humans each own themselves, and should interact only when and how each wishes to do so – in what we call the “market.” This fundamental error he shares with all who favor the continuing existence of government. Thus, at root, every politician is a Nazi.” From: http://strike-the-root.com/monster-in-making

      • jadan

        I’ll certainly leave you alone and wish you godspeed, but alone is not a good place to be. Sovereign individuals are purely theoretical. In reality, if you don’t have a support group of some kind to promote and defend your values your chance of survival is poor. You will be running and hiding from others who want to bring you down just for sport. If you’re not part of an entity larger than yourself there is no one to defend your life & liberty.

        • Ed

          The market is a “support group”.

  • Dec 30, 2015 Free To Choose 1980 – Vol. 10 ‘How to Stay Free’

    In the final program from Free To Choose -“How to Stay Free,” we learn that democracies always self-destruct when government actions physically and morally bankrupt a nation; when citizens insist government legislate an end to misery and want. Includes an interview of Milton by Meet the Press host Lawrence Spivak ©1980.


    • Auld Spyce

      “… when citizens insist government legislate an end to misery and want.”

      That’s not what’s happening. What is is connected plutocrats are buying political favors on a vast scale, to the point that the guy on the street’s view of reality appears remarkably like a fascist police state in perpetual fear of potential insurgents, both foreign and domestic. At the same time we’re financing multiple wars on many fronts, only some of which are actual shooting wars. It’s a messy century, and it feels like hurtling down an avalanche slope inside a snowball. The tree line’s out there waiting for us to get there.