From the White-PillBox: Part 18

Thanks, Canada! Having recently frozen banks accounts unilaterally, the Canadian government has done a great service in advancing the decline of the State.

The various responses of the Canadian government to the recent trucker convoy protest have helped open the public’s eyes in various ways regarding the nature of the State. This includes its open contempt for the common blue-collar workers’ concerns¹, and the State’s and media’s bias against favorable coverage of the events. These lessons are public Red Pills…which are White Pills for advocates of liberty.

But the State’s best example of shooting itself in the foot was freezing the bank accounts of truckers, protestors, and even those who contributed to their cause. The message to the public was clear: if the State doesn’t like what you do, what you say, or how you spend your money, it will strip you of your ability to support yourself financially.

And the public learned: you don’t have to be out of the mainstream for this to happen.

This was of course tragic for the victims of this latest State tactic. But it served a purpose in the greater strive toward liberty. The State has further chipped away at public faith in government money and in the government’s tight partnership with financial institutions: it explicitly showed people that their assets can be seized arbitrarily, any time.

A quick tangent…the importance of money to the State

Money is the State’s fuel

Money is the root – not of all evil, but of the State. More to the point, money provides the fuel that sustains the State. But this differs from the way money fuels the lives of normal society. Individuals and private groups can only survive on money they earn, via interactions with others by consent. On the other hand, the State gets money via taxation, that is, by violating consent. In addition, the State cannot typically survive on taxes alone, so it must necessarily monopolize money. By centralizing control over money, the State can fund its ever-growing ambitions by unlimited borrowing and money-printing. And its monopoly discourages alternatives, making its own money the only game in town.

The State was smart to monopolize money and shut out competitors ². In the pre-digital world, it was all but impossible for a competitive currency to emerge that was free from government eyes.

But it is also the State’s Achilles Heel

The State is not so lucky in the computer age. Technology now permits, in theory, digital money that can be fully protected from the view and interference by government. If the State cannot interfere with private alternatives, its own money will likely compete poorly.

And if the State cannot compete with private money, in time its own money will fall into disfavor, or even go extinct. At best, the State’s budgets would be curtailed to only what it could tax.

A fortunate confluence of events

Even before the trucker issue arose, two important dynamics were in play…dynamics that are undermining the State’s monopoly on money:

1. The public was seeing their money lose value, as inflation returned with a vengeance. And unlike the past, the public is a bit more aware that inflation’s underlying cause is government printing of money…something that will clearly continue.

2. Crypto has been waiting in the wings, slowly evolving as a genuine private alternative to government fiat money, and gaining wider acceptance with each passing year. The major cryptos have even weathered the storms of the last two years reasonably well (e.g., COVID, the Russia/Ukraine war). Crypto is no longer seen as a passing phase.

If we compare the above to gasoline, then Canada picked a good time to light a match. They directly attacked private bank accounts, at precisely the time when secure alternatives are emerging whose value the government cannot erode.

Moreover, Canada’s action set a clear precedent: it can, and would, repeat financial aggression whenever it sees fit.

But the wider lesson is also clear: it was Canada, a mainstream western government, that did this. To anyone who cares about their financial security, the takeaway is obvious: your money is not safe from any government, nor is it safe from the financial institutions who are more than happy to do their bidding.

In one stroke Canada helped the cause of liberty immensely. It did irreparable damage to the global public’s faith in fiat money, helping draw greater attention to alternative currencies.

The main domino - the U.S. dollar

The effects impact all government money, but most importantly, the U.S. dollar. The main reason the dollar has remained strong is the combination of America’s historically powerful economy, with the perception that its money is safe (backed up by “the full faith and credit of the U.S. government”, that is, nothing tangible). But this perceived strength will become meaningless as the public starts realizing that their dollars, already unstable due to inflation, can be seized by the government at will.

At a time when viable digital alternatives are forming ³, it is becoming clear that the dollar’s days as a legitimate currency are numbered.

And this means the State’s ability to persist (at least at today’s level of size and strength) will be severely undermined.

1. The State can claim all it wants that it represents the common man; but when a mass blue-collar movement such as the trucker convoy runs afoul of the State’s agenda, it can crack down hard to exterminate that movement. The State made clear that its own interests, and not the peoples’, have priority. This is an important lesson: the people are not the government. The State is a separate and distinct group, which, as a parasite, needs to feed off private producers for its own survival. The State (again, as a parasite) does not, indeed can not, represent the positive interests of the people.

2. The U.S. has not always enjoyed a monopoly on money. Prior to the Federal Reserve, private currencies existed and were a normal part of society. But in the century since the Federal Reserve was created, the public has come to believe only a government can create and manage a stable currency. Ironically, the 20th century saw far greater economic turmoil than the 19th, when money was more competitive.

The U.S. dollar is referred to as the world’s reserve currency. In fact, it holds that distinction merely because it is the least unstable when compared to all other national currencies. Thus, the dollar’s staying power is explained not from its strength, but because all other world currencies are seen as weaker.

The hard (i.e., non-digital) forms of alternative money have an uphill climb, and not only due to the State’s monopoly on money. As a practical matter, precious metals such as gold and silver, though safer in the long run, are poorly adaptable as money in the modern digital world. The same is true for other hard assets (e.g., commodities, real estate).

3. Cryptocurrency fulfills key elements of money: a medium of exchange, a unit of account, a store of value. But to become viable as money, it must be widely accepted in these roles.

The State of course hampers crypto’s progress. The greatest impediment is the State’s legal tender laws, making it a crime for an alternative money to take root. And the State builds other roadblocks to crypto, for example, by means of tax laws.

So it is conceivable the State may kill crypto. But it is far more likely crypto technology has matured too far to be killed. Moreover, State officials around the world are increasingly becoming personally invested in crypto, lowering the incentive for the State to hamper its progress. And solid legal experts familiar with both crypto and Intellectual Property law are actively working to protect the fledgling technology.

And then there are the geeks.

Specifically, these are the developers and engineers who design and implement the foundations of crypto technology. To them, nothing is as compelling as a challenge. Tell them they can’t do something, and a hundred of them will each come up with a way to do just that.

The State is powerless against this. There are thousands of near-genius-level minds, spread across the globe, disconnected and unrelated (except in their determination to solve the big challenges of crypto). As we speak, they are thinking about bullet-proof peer-to-peer privacy, lightning-fast crypto transactions, and simplicity of use.