1008 sats \ 21 replies \ @elvismercury OP 1 Nov 2023 \ on: _Broken Money_ book club, part 3 bitcoin
Lyn makes the point that the ability to print money fundamentally changed how nations made war, since they no longer had to tax their citizens to enable war efforts. Following this logic, the standard btc narrative is that returning to a hard-money standard will reduce conflict by reigning in these tendencies.
But if one of the original reasons for switching to fiat was to muster resources to fight wars (see e.g., p. 113), and to coordinate human action in service of those fights, what would it imply for a nation in the process of adopting a btc standard vs other nations still using fiat money?
Fiat helps wage wars of aggression, because it quietly syphons resources away from people who wouldn't provide them willingly.
Defensive wars are a whole different story. People are very willing to invest in defending their own homes.
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It makes logical sense, but I'm unsure of how big the effects are in practice. In antiquity, there was no end of wars of conquest under hard money standards -- in fact, going out and looting other nations made a lot of sense, since their wealth was a giant honeypot. Rome encircled the entire Mediterranean with this strategy, and they weren't the only ones using it.
Moreover, my perception is that mercantilist attitudes in the Age of Exploration were massively driven by sound money -- trade was considered zero-sum, you wanted to export (to get gold) vs import (sending your gold out of the country). Much aggression and jockeying and war ensued. Although I admit my knowledge of this is cursory, am happy to have other perspectives.
Maybe my most macro take-away is that, in a complex world, complex phenomena emerge, and our ability to foresee how it will shake out is minimal: make a plan, god laughs. As I mentioned in an earlier comment, I'm confident of almost nothing in life besides this.
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I agree with a lot of that, but I have some random thoughts to follow up with.
Monetary debasement was common during antiquity (coin shaving, hole punching, etc.), as a way to finance wars.
The scale of war was much smaller: often seasonal and regional. However, wars often lasted for generations, so maybe that's a wash.
The spoils point is interesting. Maybe fiat changed the nature of war, to where we don't explicitly take territory and slaves as often.
The Age of Exploration opened enormous new trade opportunities for Europe, which is what financed those expansions. Modern wars don't seem to do that, but maybe they do for the individuals who start them.
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So much nuance.
It would be interesting to war-game (pun intended) what war might look like in a world where people across all nations had significant wealth in btc; and perhaps nations did, too. How would these forces interact?
E.g., it would seem to not make sense for wars of conquest, since it would be really hard to seize people's btc (though not impossible, contra maximalists) and the more btc someone held, the harder to seize it would be, as the institutions, norms, and tech around distributed storage evolved. But perhaps "wars of conquest" would come to mean something else, in time. But what?
The spoils point is interesting. Maybe fiat changed the nature of war, to where we don't explicitly take territory and slaves as often.
This one is really interesting, too. It is such a ... faux pas now to seize territory. Like, it feels gross and beyond-the-pale in a way that I imagine is quite new in the course of human events: of course you don't get to take over Iraq and slaughter its male populace once you conquer it. Perhaps forces unleashed in fiat are playing out in cultural norms, sometimes for good, sometimes for ill? What would the btc equivalents be?
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To add some humor, both warring nations find a neutral 3rd party. Create a 2 of 3 multisig with the pot going to the winner of the conflict.
But looking at the wars fought between Italian city states under a hard money world is a good example. Granted the Medici family could finance a side.
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I do not envy the people setting out the terms for that oracle to decide on :)
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Plus each warring nation would need to find a bitcoiner to help them sign the transaction.
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Talk about moral hazard. Ideally, the aggressor would lose something substantial.
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Ok, let's play that out. In an offensive war the aggressor puts up a pre determined amount. Ideally enough to weaken them so they can't try this again. The defending party being the one with the most to lose in a loss considering territory still has to put up a bit as well to lock up the transaction.
I can only imagine the debate at the UN, you've now made sanctions obsolete & going war adds more risk. Hmmm
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Sanctions made themselves obsolete by not working.
I didn't propose a specific form, so it's hard to "play out" my idea, but the point is to disincentivize invasions.
The transition will be ugly if the fiat powers gradually decay as opposed to a smash bang apocalypse. El Salvador isn't far from the U.S. southern border.
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Can you say more about this? How do you imagine a "gradual decay" playing out, vs a sudden apocalypse?
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Well, I guess we could use current events as an example. The U.S. treasury announced today that they would be changing the bond auctioning schedule to absorb the maturing bonds while requiring more war funding "for our security." There has been a gradual lessening of demand for these bonds worldwide, causing higher yields. Since the dollar is the world reserve currency, it still benefits from "flight to safety" trades from all the other much worse fiat currencies. This situation can drag on for a while as the dollar is gradually debased by worsening inflation.
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It seems to me that this would actually be better (in the sense of less apocalyptic human tragedy) than a complete collapse, though? You can imagine people in the world slowly coming online to the ways money needs to change, and btc's potential role in that.
(And surely there would be some other changes, too, that are hard to foresee right now; I give zero percent probability to a future where all the powers of the world say: Okay, well that fiat thing has played out, time to shift over to bitcoin!)
Is your opinion that a "rip the band-aid off" situation would be better, ultimately, despite short-term pain? Or maybe I misunderstand you.
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I deleted my prior response. I was trying to multitask-deal with a work crisis while replying. I must learn never to let work get in the way of posting on SN.
Anyway, here's what I was trying to say:
I'm 100 percent in agreement with you. The human tragedy would be horrific. Also, as you point out, it's very unlikely. There are some people who anticipate a sudden collapse, but I don't.
My fear is that in this likely gradual scenario, bitcoin standard first mover nations may suffer violence from the dying fiat states in a futile attempt to keep the system alive. This would probably not be the case with an apocalypse, but overall human suffering would be tragic.
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Priorities, Siggy. Also, you probably just wanted 152 more sats from me, you scammer.
The scenario you present seems plausible. One thing I'm noodling on, wrt the "dying fiat nation vs fledgling btc nation" is: are there correlates with the factors that would result in a dying fiat nation that might preclude them struggling against the fledgling btc nation? Obviously anything is possible, and it's very easy to tell yourself a feel-good story about how btc's triumph will be sudden and glorious and everything will be amazing thereafter. So I'm trying not to delude myself about things working out.
But in the same way that people / places that are doing well are generally socially progressive (e.g., less racist, less xenophobic, friendlier, higher trust, etc) then is it possible that btc adoption would be a sign of generally-having-your-shit-together in a manner that could short-circuit these kinds of hostilities?
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I tried to make up for my transparent scam. Damn. Your scenario would be great. Some people might see it as an overly touchy feely utopian take, but the incentives align. I'm listening to Erik Cason on WBD. It seems apropos as he discuses Satoshi's ethical unselfishness.
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