There are four broad categories of means, or factors of production, which are involved in achieving our ends. The first is labor, which refers to our own exertions, whether mental or physical. The second is land, which refers to any natural resource as it exists in nature. The third is time. At least a small amount of each of these is required in any production process.~Krawisz
I recently came across this article hosted on the Mises.org site written by Daniel Krawisz called “How the Free Market Works”. The article struck me because it is in great contrast the article he wrote on the Nakamoto institute site “Hyperbitcoinization” which is observably devoid of economics theory.
In Hyperbitcoinization the idea is that bitcoin will inevitably cause the hyperinflation of the existing “fiat” or centrally banked currencies. Somehow Daniel feels he can assert that this won’t be a disruptive event:
Hyperbitcoinization will not disrupt the economy to nearly the same degree as hyperinflation. The currency is the instrument of the division of labor, and hyperinflation makes it unreliable and forces people to use worse alternatives. In a hyperbitcoinization event, people switch from a fundamentally inferior currency to a superior one, whereas in a hyperinflationary event people will only switch to a new currency once the old currency becomes worse than the next best alternative, such as gold or detergent.
Another assertion which he doesn’t back up with any reasoning at all either (let alone economic theory) is that this phenomenon will mark a great boon for our global society:
Hyperbitcoinization should be accompanied by a rapid improvement in productivity and wealth.
Krawisz is always making references to hypnosis and I think its unsurprising as he effectively has much of the bitcoin community hypnotized into perpetuating and supporting an argument that has no reasoning involved in it. It would be a very great form of power…
Disambiguation of the Uses of “Anarchy”
I have been criticizing the proponents of hyperbitcoinization many of which also identify as anarchists and specifically crypto-anarchists for being Marxist aligned in that they believe that they can achieve a great freedom if they up-heave the existing frameworks that govern our governments.
More recently I was tracing the definition of anarchy and the etymology (on wiki) trying to understand the word and the philosophy better. I found this interesting disambiguation:
Godwin is generally regarded as the founder of the school of thought known as philosophical anarchism. He argued in Political Justice(1793) that government has an inherently malevolent influence on society and that it perpetuates dependency and ignorance. He thought that the spread of the use of reason to the masses would eventually cause government to wither away as an unnecessary force. Although he did not accord the state with moral legitimacy, he was against the use of revolutionary tactics for removing the government from power. Rather, he advocated for its replacement through a process of peaceful evolution.
So there is a more Marxist aligned anarchy which would be more of a forceful and eventful removal of the current hierarchy through revolution and that would run in contrast to a more gradual evolution towards the dissolution government over a less disruptive period of time.
I don’t really mean to make a new definition here but rather to contrast the Marxist aligned bitcoin anarchy that a hyperbitcoinization event would entail with a definition of an anarchy that might result from a “nashification” event in which central banks, however reluctantly, chose preservation over complete irrelevance via moving to a Nashian style bitcoin standard. In a Nashification event a scenario of hyperbitcoinization is prevented via a global coordination thus mitigating the effects of a dramatic global hyperinflationary scenario of all of the existing national currency (and the euro etc.).
The central banks retain control of their monetary policies but simply move their stability target to the exchange price of bitcoin. This removes what many see as the arbitrary and purposeful inflation and degradation of the purchasing power of a money as well as the function of inflation in regard to currency competition but still allows a country to retain the usefulness and coordination capabilities of their respective central banks.
Is a Central Bank That Can’t Degrade The Purchasing Power of The Money It Issues Still a Central Bank?
Its kind of a silly question but it speaks to a critique given by Eric Voskuil on Nash’s Ideal Money:
The theory is therefore invalid. Either fiat will cease to exist or it will collect tax. States only surrender this tax under extreme duress and in such cases only briefly.
On an asymptotic and slow scale then we can see the re-solution and that Eric hasn’t really given a counterargument to the Nashian end but rather he has simply alluded to the notion that as central banks have less and less ability to degrade the purchasing power of the money they issue they lose their role and function (by Voskuil’s definition).