Wrote a thing for the Sound Money Defense League.
The backdrop of a broken monetary regime is the underappreciated variable in many current political and social disputes. Until we pay attention to how today’s monetary regime is different from all that came before it, most current topics of a fiscal or macroeconomic nature won’t make sense.
Esp this graph of English prices over 800 years is pretty revealing:
Note: this is not what we'd expect to see under a bitcoin standard. This is what happens under commodity money regimes, where the supply response makes "money" stock expand when prices are falling (and slow down/contract) when prices are increasing—which generates this long-run stability in the price level.
(there's a more elaborate explanation in Larry White's Better Money, or the series of reviews that Emile Phaneuf collected for a Center for Market Education publication, here).
I discussed a lot of these topics in the Bitcoin Policy Institute webinar post too (#889571)
In a monetary economy, the money layer “exists on top of” real economic decisions, actions, and processes.
When the money layer faithfully mirrors the underlying real economy, it maximally serves its purpose; a stable, neutral, non-distortionary money allows us to plan our economic affairs, make economic calculations, engage in financial contracts, and save for the future.
When the monetary layer fails to achieve its role, it makes all those actions harder to navigate, causing a real drag on our economic behavior—with the unfortunate outcome that we’re all poorer for it.
We find it harder to make commerce, engage in mutually beneficial contracts with employers or clients, or save for old age. We must constantly reassess and renegotiate our contracts and wages, even switching jobs every few years to make real headway.
this is pretty astonishing, really, when you think about it:
We become, so to speak, part-time managers of our own finances, having to maximize interest on bank accounts, invest spare funds in the stock market, set savings aside in tax-favored retirement accounts (again consisting mostly of paper stocks), or lend funds to the government against fickle and unreliable promises that we will get back what we put in—tomorrow or in 40 years.
"This is not a natural economic world, and, it is not inevitable either. Our savings behavior and the assets we use to move economic value forward across time are directly related to the monetary regime under which we live."
When the money itself doesn’t work to safeguard future value, people use (“monetize”) everything else that’s liquid enough—paintings, rare wine, houses, stocks. Our houses become ATMs, our mortgages a way to short the currency; these behaviors have distortionary effects, most obviously by using condos and apartments in our largest cities for storing economic value rather than providing shelter for their owners, or a financial sector much larger than it would have been under a harder money.
Hashtag monetary premia (#830458)