This post is an excerpt of a far longer post that I am posting separately because of the length of the original post… For those who wish to understand inflation in the context of the past and present should read the original post in its entirety, The Economics Of Money, Credit, Capital And Labour – The Rise Of Bitcoin, The Fall Of The Machines…

Deflation – Definition

I will provide a simple definition, deflation is the increase of economic production (goods and services, etc) over and above the increase in currency or money supply, or otherwise stated an abundance of goods and services compared to scarcities or shortages of money…

Deflation – Labourism NOT Capitalism

This is the most critical aspect of any discussion between an inflationary and deflationary monetary or currency system that has been ignored by Socialists (Marxists, Keynesians), Classical Liberals (and Austrians) and Conservatives, and only proves in my mind that the last three hundred years of central banking as “pioneered” by the central Bank of England and the industrial capitalism lauded by the Classical Liberals (and Austrians) and despised by Socialists and Conservatives, was an inflationary currency system… Deflation let me make this clear inflates the purchasing power and value of labour while devaluing or depreciating the value of capital… I will repeat this in the hope that it sinks in for any reader: deflationary money and currency is issued and circulated at a lower rate than the economic production (economy) that it is exchanged for, a scarcity of money or credit creating an abundance of resources and rewarding labour first by depreciating the value of capital priced in that labour… For example and as I have described in many past posts, a deflation rate of 5% per annum or otherwise stated an economy where private production of goods, services, labour, land and property would increase 5% above the increase in money or credit supply, would indicate the increasing purchasing power of labour exchanged or produced (and stored in money or credit) of 5% in the next year… So if you worked and stored a thousand pounds worth of production this year, next year that thousand pounds would purchase you 5% more (£1,050), a fifty pounds surplus value if you will for doing nothing (and not consuming)… The flipside of this 5% increase in saving power would be a 5% depreciation of property and asset values in the next year, or stated differently property valued at £1000 today will be valued at only £950 in one year… Labour appreciates as capital depreciates and at the polar opposite of inflationary capitalism where as I described earlier capital appreciates as labour depreciates… Take a longer term view and extrapolate a ten year trend of an annual deflation rate of 5% (let’s say 50% or one half to save on the compound maths), producing and saving £1000 in year one would see a fifty percent increase in the value of purchasing power by year 10 (£1500) and conversely capital with a value of £1000 in year one would only be worth 50% or half (£500) by year 10… Having established this principle of monetary deflation as it pertains to labour and capital as a self evident and IRREFUTABLE economic logic and truth, I can now use this principle to derive some pretty astounding insights on a free market economy operating under deflation…

Deflation – The End Of Capitalism

If the classical liberals, libertarians and Austrians must keep banging on about the glories of capitalism while we live in an essentially communistic and inflationary fiat currency system (as was defined by both Marx and Lenin), then Bitcoin, honest and fraud proof exchange and currency, deflation, Thier’s Law, and above all labourism will end capitalism, as more and more people will realize the supremacy of a labour based honest currency over a capital based fraudulent currency… They will realize that deflation will be shared equally amongst all holders of currency (bitcoins) while the value of the capital they need to live, work, produce and form a family will be perpetually devaluing, as opposed to the perpetually inflating capital values that inhibit life, work, production and family formation in a criminal system that allows the issuers of currency a leveraged buyout of the rest of the economy for their own enrichment and to the poverty of all others… The era of Capitalism, the derivative of central banking is over as in the coming years the only guarantee is it will be debased and discredited further, as Gresham’s law and the spending of the bad money will finally unleash the long dreamt inflationary wet dream of central bankers that will eventually unleash the hyperinflationary hallucinatory nightmare of the central bankers… Be careful what you wish for…

Deflation – Property Distribution

The essential mindset that deflation promotes is the hoarding of currency and the dishoarding of excess property, as labour becomes more valuable than capital then so does hoarding currency become wealth creating while hoarding property becomes wealth destructing… As a reminder a 5% annual deflation rate would indicate a 5% depreciation of capital (land, property, and capital goods) in the next year or otherwise stated a five per cent wealth tax on hoarding property over currency… This has profound implications for the distribution of property throughout society and indeed for social order in general…

The first effect of deflation and hoarding currency over property is the end of boom and bust capital bubble cycles, the end of capital as a speculative investment and the extinguishing of the rentier class (the 1%) that with access to the cheap credit of central banks buy up or hoard all the property driving up property values and forcing the rest of the population to rent from them either through outright renting, a mortgage (literally translated from Latin as a death pledge – to banksters) or in the case of the centralization of the means of production (like factories) renting your labour or what the socialists would call wage slavery…

Under deflation this inequality of property ownership is equalized through the transmission mechanism of scarcer money than property, i.e debasing property values incentivizes rentier and capitalist dishoarding of property to hoard currency, thus property ownership is decentralized and distributed to all classes of society from the top to the bottom… Capital and the means of production are no longer in the ownership of the few to exploit the many, but in the ownership of the many which de facto minimizes any exploitation to few… This naturally means smaller and smaller economic units, labourism providing the small and local business owner with a competitive edge over larger (and more capital intensive) national and international competitors and multinational corporations who had the cheap money and rigged the regulatory apparatus for tax breaks and sanctioning the competition out of existence, will be stripped of their power and property empires by the power of deflation and the debasing of capital…

Deflation – Eliminating Serfdom

The much misunderstood and maligned (on purpose) Feudal Ages which as I’ve demonstrated in terms of financial and legal sovereignty (fraud proof accounting ledgers) were the freest markets and societies in Western history and sovereign private property, but they were upfront about the problems afflicting the weakest and most dependent of the population, specifically those who didn’t own property, the serfs… Serfdom was therefore property owners, kings, princes, (land) lords leasing or renting their land to the serfs, allowing the serfs to produce in order to survive and in exchange for a reciprocal contribution (what I would call rent, what historians and liberals call “tax”)… Property owners and property renters… Serfs who could produce enough and save enough could in time themselves own property and therefore feudalism (and deflation) was a fluid and ever increasing property owning society (liberty), the distribution of property and moving away from dependency and the slavery of renting property (serfdom)…

Under the central bank system of capitalism today the ownership of the vast majority of the West’s property is in the ownership of a tiny gang of bankers, financiers and corporations, and the rest of the population is increasingly forced to rent both their labour (work for someone else and probably subordinate to one machine or another) or renting property (house, land, workshop/factory), indeed the debt based system of modern capitalism is premised upon loans, mortgages, and the extension of credit and inflation, creating less owners and more renters (serfs), the centralization of property ownership through printing presses as I’ve already described numerous times… These historians and economists that tell you that serfdom ended with the dark ages of feudalism and that the thirty year mortgage that will drain the rest of your life and your best years is an asset rather than a liability,  repaying for the privilege of “owning” (in thirty years of course!) your own property is progress and freedumb and the glory of capitalism… The truth these charlatans won’t tell you is that with the advent of banking and its inherent fraud was the extension and weaponizing of serfdom from the bottom 10% of feudal populations to the bottom 90% of today’s modern Western population…

With the appreciation of labour and the depreciation of capital comes the reversal of serfdom, which is also called Liberty… Perpetually depreciating property simultaneously becomes more affordable for more and more of the property-less labouring population while appreciating currency incentivizes hoarders of property to dishoard, which eliminates price speculation and property bubbles, works to minimize and eventually eliminate the concept of renting as outright ownership replaces exploitation and parasitism in terms of rip off rent, interest rate usury on repayment terms, and the dependence of having to continually chase bucks and produce to pay banks and rentiers on currency printed from thin air to lend to you… Outright ownership also increases the incentive to conserve and maintain the standard of property rather than the indifference and neglect that is often a symptom of rented property (by both rentier and renter I might add), private property ownership incentivizes skin in the game and maintenance of what is your own…

Deflation And Social Mobility – The Property Ladder

One of the more impotent cries from the political and chattering classes is how the bloated property values of today (that has enriched these same tax-eating classes no end in the last two generations) is stagnating social mobility and family formation, the crushing amount of rent and mortgages (debt) it takes young people to “own” property is creating a demographic timebomb, stagnating native Western populations and creating increasing tensions between boomers (the property owners who got rich off housing asset inflation) and the millennials (who got shafted by asset price inflation and debt), and it would seem that this problem has no solution and no end and I would concur but only under these inflationary economic conditions, and as long as these economic conditions can withstand hyperinflation… As I have already explained inflation is a terminal currency system whichever way you look at it, and will sooner or later be replaced by honest and superior deflationary currency that will reverse the inequalities between old and young and transform the incentive structures of both capital and labour…

As labour appreciates and capital depreciates then young people and millennials have the edge in terms of valuing their labour in their production years while the property values of old people (boomers) will be depreciating against it… Houses becoming cheaper means that people will be able to afford houses, land, and workshops for either family formation or for producing at a younger and younger age, so increasing meritocracy and greasing the property ladder so that moving up in the world becomes a lot easier if not an in-built consequence… The property owning generations having been lifted up on a tide of inflationary credit and inequality since the end of the gold standard (1971), following the hyperinflationary meltdown of fiat currency will be exchanging (whether they like this or not) in a deflationary currency that will penalize them for hoarding excess property and incentivize them to dishoard depreciating property for appreciating currency, and will remedy a number of local and festering tensions within communities, an example being my own North Wales backyard where the desire and means of foreign (mostly English) second or third home owners who live locally for a few weeks of every year drive up property values far beyond what natives with the same desire but far from the means (even with a lifetime debt) could ever afford, and thus drives local animus against foreigners and those from outside… These symptoms of inequality that create visceral tensions within local communities are directly created by the system of capitalism and will be largely if not entirely remedied by labourism… Equality (and a mutual respect) between young and old…

Deflation – Extinguishing Debt

As inflation by definition is a fraudulent increase in the credit supply (over money) this is the creation of debt as a future obligation… The lower interest rates stimulated by money printing lower during the debt (credit) cycle to tempt more and more shaky and unsustainable lending (think sub-prime) until bankers contract credit and start hiking interest rates, the cost of debt increases, borrowers default, bankers hoover up collateral, rinse and repeat… Under a debt based system interest rates are critical translation mechanisms for time preference and future orientation of both individual (micro) and the macroeconomy at large, and once you meddle with this transmission mechanism you will create over-consumption and under-consumption in cycles of ever increasing ferocity, debasement and inequality…

By the definition of deflation there is a sound and predictable scarcity of money (under gold, silver or bitcoin) and especially under bitcoin there is no central issuer or financial counter-party, then debt markets to the extent that they will exist will be peer to peer and in no way shape or form similar to the centralized monetary hoarding of banking… There will exist interest rates on lending of bitcoins at the margins (as there are now) however deflation incentivizes hoarding than lending out as the purchasing power increases are built in from year to year, while simultaneously the depreciating values of capital also making debt a losing proposition for both lender and borrower in the long run, debt doesn’t really work and cannot really work long term and so interest rates cease to have importance as debt is being extinguished… Under labourism the incentive is to produce and save in the present rather than borrow and consume from the future, and is aided by depreciating capital values that make production and saving even more attractive again reducing any incentive to become indebted, dependent, and a serf…

The elimination of debt and serfdom from society will naturally eliminate the banking, finance and legislative sectors, will eliminate counter-party and middleman, banker, accountant, lawyer, and put a cork in fraud and the exploitation of the overwhelming majority by a fractional minority given a monopoly over legal tender… The last five hundred years since the disastrous rise of nation state monarchy and subsequently central bank industrialization and centrally planned debt enslavement and dependency is coming to an end, and now with Bitcoin acting as currency and ledger system and the re-modelling of the split tally ledger system takes us back to a new financial dark age of peer to peer financial and legal sovereignty distributed among the many and not the few…

Deflation And Time Preference – Ever Lowering

As I described above debt and interest rates cease to have meaning and are effectively eliminated under deflation, however Time Preference still remains as an indeterminate and imperceptible measure of future orientation, and all I can say is that an increase in purchasing power of currency incentivizes production and saving but that it also in time incentivizes consumption of goods and services that are now becoming increasingly cheaper over time, in effect deflation gives you more for less when both saving and consuming, but in essence the increasing value of currency, net worth, and standards of living should self evidently lower time preference over time as the future discount rates trend toward, while never quite reaching, zero… Under deflation you are no longer anxiously chasing the future but enjoying life today… Time preference is a critical component of mental health…

Deflation And Labour – From Employment To Self Employment

I have described how under inflation capital is supreme over labour leading to the centralization and automation of capital and the debasing of labour both in purchasing power and in quality of work, it was this rather blatant inequality that lead to the rise of the labour movements and unions of the second half of the Nineteenth Century to provide an unified front for bargaining rights against the capitalist class, indeed the Labour Party in the UK is a derivative of this Marxist Theory of Class conflict between capital and labour, the Socialists appealing increasingly to the state for power (and money) to buttress against the private monopoly of finance… The Socialist solutions to the evils of a private banking system with government monopoly is more government, and so government starts to act as arbiter between its banking overlords and its labour minions with part or full nationalization of industries (and further mis-allocation of capital), regulations that attempt to curb unemployment (minimum wage laws) and that result in even more unemployment, in short every paradoxical government counter-move only exacerbates the symptoms and fallout of an inflationary and government backed financial order…

Under deflation government legislation and regulation (what will be left of it after losing its central bank funding mechanism) becomes completely ineffectual as labour and purchasing power is separated from the financial and governmental straight jacket, increasing value of labour and depreciating value of capital incentivizes self employment and the owning of the means of production rather being dependent upon the means of production and employment (and renting his labour) by others, deflation creating more owners at the expense of workers, again reducing and eventually eliminating exploitation of labour and the hoarding of capital, distributing the means of production more equitably exploding individual and unique small business in the production of goods, services and labour, and eliminating the regulatory and inflationary economics that is the only real protector of multinational and plundering social engineering corporations…

Deflation And Capital – The Rise Of Bitcoin, The Fall Of The Machines

A central crux of this post has been how inflation inflates capital while debasing labour and that it was this Bank of England deformity that created the rise of the machines to plug the gap of the staggering loss of living standards that unleashed England’s Nineteenth Century population boom as an abundance of credit created scarcities of both capital and labour (and labour at the expense of capital), while under deflation these roles are reversed as scarcity of currency (and purchasing/spending power) creates an abundance of labour and capital (and capital at the expense of labour)… This labour appreciation is critical as it protects purchasing power and therefore halts industrialism and the rise of the machines that has been unleashed by inflationism and capitalism… When the value of currency is increasing then the value of labour is increasing so the need to automate is eliminated, indeed it can be put in reverse as the deflationary mode of production rewards more with less, if anything there is an incentive to de-automate… As I related in my anecdote of my last decade working in the construction industry there was a pronounced move by everyone to ditch labour and replace with machines and to machinate the remaining labour pool, hand tools replaced with power tools, labourers replaced with tele-handlers, wherever a possible edge were available we had to capitalize on the increased production capabilities of machines to stay ahead of the competition and to keep from going out of business, these are the perverse incentives created by inflationism and it is labour that tragically always takes the brunt… Under labourism these incentives reverse and so hand tools can once again replace power tools and other labour intensive elements can return as net wealth automatically increases, and depreciates the value of both capital and machines, and also cutting down or minimizing the effects of industrial machines on our health, in noise, dust, and vibration… The glory of labourism is that it promotes a labour intensive craftwork economy creating great works of beauty in the realms of agriculture, construction, furniture and artwork, clothing, and replacing the rock bottom value of the mass produced industrial quantities of uniform plastic junk imported into the West from China that has no character, no charm, and no real value except in this age of poverty driven consumerism… Labourism is the return of local production, local materials and resources, local labour, local craftsmanship, local clothes production and fashion, food production, vernacular and civic architecture and construction methods, furniture and home furnishings, indeed Say’s Law of exchange simply states one good creates the demand for another, and under scaricty of currency, goods, services and labour locally and sustainably produced and the polar opposite of the globalist economic structure, its exploitation, and environmental destruction…

This does leave us with the question of what role machines will play in our future, because if industrial machinery and the endless consumption of new and better machines to increase productivity was a side effect of the extracting poverty of inflationism and banksterism, then under Labourism this trend will reverse as labour becomes supreme over capital again… And to be clear here, I am NOT anti machine and do not harbour some visceral hatred for the gadgets we are very much dependent upon today from electrical goods at home to computers for work and leisure, car for travel to and from work, and modern employment or self employment which is so dependent on increased productivity to satisfy our insane elites, that places us subordinate to technology and machines either in the office cubicle staring at computer screens, or outside an office in agriculture, manufacturing, construction, etc… Our life when you think of it is today entirely dependent both upon ever increasing cheap sources of electricity and oil, and the goods and machines that run off electricity and oil… A sudden surge in the cost of either would cripple our production and our way of life and highlight just how fragile a civilization we have become, and that I would predict is a certainty in an inflationary future… We are products of our age and ages are defined by their currency systems, from isolationist to globalist, and modern life would never have happened without central banking but still here we are and this is the world we live in…

A deflationary future and the mass adoption of a scarce and benevolent currency system would again value labour above capital (machines) and so produces independence from the necessity of industrializing… Shortages of either electricity or oil will be mitigated by increasing purchasing power to consume electricity and oil and it will be in the interest of electricity and oil providers to start using deflationary currency themselves, lest they also sink on deck the banking and nation state Titanic… The price of embracing deflation for these energy cartels and monopolies is being stripped of their regulatory privileges, tax loopholes and capital (land) values as deflation consumes the taxation and regulation spawned into existence by inflation… The same will certainly be true of national and state infrastructure such as roads and railways and will certainly apply to the Twentieth Century centrally planned motorways and interstate infrastructure… The railways were a product of the industrial revolution and motorways were the product of a post WW1 West punch drunk on democracy and increasing socialism, but these modern monstrosities that tore up the landscape of the West to undermine localism and promote nationalism, of travel, work, agriculture, and industry, are again byproducts of inflationism… Under deflationism these nationalist central planning legacies will have only voluntary donations and tolls to cover their maintenance costs, and as I argue there will be under Labourism by default far less industry and far more self employment, far more working from home and workshop and far less chasing bucks and daily commutes to soulless office cubicles for a living, and far more local food production and good and service manufacturing in a decentralizing social order, will there even be sustained demand for the maintenance of these centrally planned road networks that have blighted the land barely the last century? What the unsustainable and un-maintainable networks of nationalist roads will lose in terms of travelling and tourism trade other modes of transportation will likely gain as air travel, the depreciating cost of land, construction, machines and infrastructure costs for constructing a network of independent and decentralized airports consuming a fraction of the capital of roads in terms of land, construction and maintenance… Travelling by air will become I think far more easier convenient and cost effective in the future for medium and long distance travelling than cars, the car and automobile industry I’m far more bearish on…

Deflation And Conservation – Labours Of Love

The move from inflation and exploitation to deflation and conservation, is the switch from scarcity of capital to an abundance of capital… Perpetually devaluing land and property values remove speculation, unsustainable new and industrial scale housing projects and most importantly discourage hoarding of excess property… Because of this there is no longer any profit motive as all property development will now automatically be at a loss, investing in a property or project now becomes a labour of love rather than an economic opportunity which fosters a conservationist mindset, as increased purchasing power of currency decreases the costs of repairs and maintenance promoting labour intensive (labourism) resources and construction methods conserving traditional building practices and architecture…

In terms of the ratio of new construction to the existing building pool, as I described in my Real Estate post inflation creates scarcity of homes (as they are hoarded by the money printers, or taken out of circulation and virtually abandoned in some instances (second and third homes for example), this artificial scarcity and increasing values of existing housing (with real estate agents often taking the brunt of housing bubble speculation) stimulates an artificial and inflationary demand for new housing developments creating urban, suburban and rural sprawl to maximize profit and utility at the expense of beauty and eventually utility itself, and are often horrendously thought out in design and execution by get rick quick merchants and cowboy builders leveraging cheap money to flip houses as they like are everyone else incentivized to chase bucks… The only reason these projects were developed is because the last half century of housing boom and bust bubbles have made building new houses with real input costs, like materials, plant and machines, and labour, cheaper than existing and used property (with zero input costs) and is outright madness, and has created all this environmental destruction as the construction industry was captured and tossed about by inflationary credit cycles… The coming of scarce money will radically deflate and devalue property and land values to account for this newfound scarcity and leads to the dishoarding of the rentier class and old for the benefit of the early adopters of deflationary currency, as I explained at length in my Bitcoin Adoption Demographics it will be the millennials as first adopers that will benefit from the later adopting boomers while they still believe in the fiat ponzi scheme that inflates their capital values and pays their pensions… This euthanasia of the rentier class (channelling Keynes) will be done by sound and honest currency, distributing property ownership, reducing hoarding and abandonment and neglect of property, the knock on effect of this devaluation of existing property will be purging the construction of new property, as renovation, extension and maintenance becomes far more cost effective and consuming far less capital than the construction of new property and its environmental consequences that have become unhinged the last half century…

Deflation And Demographics – In Defence Of Malthus

It was Thomas Malthus in the last years of the Eighteenth Century who observed and became alarmed by England’s population growth which as I have already explained was a consequence of the Bank of England as inflation debased labour unleashing the unprecedented population boom of England, Wales and Scotland in the Nineteenth Century in effect to maintain the living standard of the average family (the horrific stories of child labour during the industrial revolution attest to this)… It is inflationism and poverty that creates overpopulation and the rise of mass manufacturing factories and machines…

Demograhics and population growth under deflation and Labourism would be sustainable with birth and death population in balance, because purchasing power of currency and labour will increase and so there is no economic incentive or necessity to increase fertility for a surplus of children (for labour), look at the chart of England’s population from 1100 to 1800, the pre-industrial (and Bank of England) era, and population increased from a few million to under ten million or roughly a 1 million population increase every century… This stability of population also eases any property or services shortages locally as another byproduct of deflation would be depreciating capital values and relative abundance compared to the currency (and labour)… Deflation, conservation and stability of labour, resources, and population demographics work hand in hand…

The one question is left is how we get from the inflationary “overpopulation” of today to the stable population of deflation tomorrow and there are two answers, the digital dark age and the analogue dark age both of which I might add would be deflationary, the digital deflationary dark age of Bitcoin or the analogue dark age of precious metals and local barter ledgers, but the population scale to which either deflationary system could scale would be radically different…

To take the analogue dark age first, this would explicitly mean a catastrophic collapse of energy infrastructure, of oil and electricity worldwide (which in today’s centrally planned socialist economies world wide is certainly a possibility), catastrophic loss of electricity would wipe out the internet and wipe out industry worldwide as you would not believe how much of modern industry and machine processes are completely dependent upon computer software and the internet, from legal land titles, to fiat money banking and financial markets, to businesses and corporations who run on computers in office cubicles and the electronics that are now in everything, the last generation has been the gradual evolution toward internet fragility and dependent global capitalist world… The collapse of the internet would end the totalitarian cashless schemes of our insane banking overlords, would end their 24 hour surveillance over us through internet, smart phones and computers, they would also lose their tax, accounting and regulatory web of deceit, in short totalitarian governments worldwide would lose all control over their populations lives in all aspects of exchange, the collapse of the internet and energy grid would also destroy big agriculture and the highly centralized and fragile just in time delivery system where thin food inventories and margins are supplemented regularly, such as shops, supermarkets… The collapse of the digital credit system would lead to freezes in businesses and this fragile system would crash to the ground with chronic worldwide shortages of credit and food, starvation, food riots, urban chaos, you get the picture… I would also estimate the collapse of today’s digital economy would wipe out 6 billion people out of 7, or six in seven people as the world population would be cut off at the knee in a few weeks or months down to around a billion, but even this catastrophic population collapse would only take us back to 1800 in terms of world population which should also give you some insight into the insanity of the 19th and 20th century central bank fueled overpopulation boom… This scenario would be a brutal and catastrophic descent into the dark age with whatever left of the human populations cut off and isolated, producing locally for survival and bartering or exchanging precious metals with surpluses… Life would be incomprehensible to anyone who grew up in the pre-civilizational collapse world…

The second scenario that I think is far more likely is the gradual transition to the digital dark age of deflation as the imbalances between capital and labour, rentier and renter, corporations and small business, machines and tools, are worked out with the young adopting distributed technology and currency rewarded with the deflation that will in effect force the older generations to dishoard their surplus property and stripping corporations of their protected and privileged monopolies and regulatory capture if and when they choose to adopt deflation, and their assets and empires sold off and distributed remedying the inequality built up under inflation… The major advantage that a digital dark age holds over the analogue dark age is that unlike precious metals or analogue local barter and credit ledgers is that Bitcoin is a globally scaleable ledger and currency system and provides a level of connectivity and trade that far surpasses and improves upon an analogue dark age, allowing a global but decentralized energy and infrastructure grid to connect exchange and free trade where it is desired… It would I imagine also save a few billions lives over the analogue dark age…

To give an idea of the potential of a collective distributed ledger I will elaborate with a thought experiment I’ve used in many past posts, that of current gross domestic product of the world population of 7 Billion that approximates $70 Trillion per annum ($70,000,000,000,000) expresssed in US Dollars, and then divide this figure by the maximum cap of Bitcoin’s currency of 21 Million (21,000,000), the value of one bitcoin would be $3.3 million each, that is one year’s GDP… A second year of GDP would double bitcoin’s purchasing power to $6.6 Million each and $140 Trillion market cap and a doubling of purchasing power in one year… A third year of GDP would value one bitcoin at $10 Million each and market cap at $210 Trillion, for an increase in purchasing power by a third in year 3… All hodlers share equally in the wealth gains of an intrinsically scarce currency…

Deflation – Government Destruction

The last five centuries since the advent of double entry book-keeping, banking credit and systemic fraud and the inherent centralization of money and credit, has also been the centralization of the state, its legislative force and its vast extraction apparatus of taxation and regulation… With the central bank inflation monopoly, the second monopoly after the law which the absolutist monarchs claimed for themselves, came the inflation of government, its tariffs, tolls, and taxes, but under Democracy and following the cataclysmic First World War did government and central banks combine, increasingly epic money printing and theft of resources from the people to the elites and printed the totalitarian taxation and regulatory framework to bleed the citizenry dry in order to fund the destruction of the West… Government is everywhere today and has replaced what were previously noble and private professions, lawyers, accountants, doctors, professors, into publicly subsidized legislation, bureaucracy, public “health” services, local authority services such as refuse collection and schools, and the Western population has never been so enslaved to and dependent on government as they are today, and if we are talking about a possible mass extinction of humans as would be implicit under the analogue dark age that I discussed above, then those dependent upon government welfare and subsidies at the top and bottom of society (the tax eaters) will be the first to perish as Malthus and Darwin eliminate and weed out the weak leaving only the strong and self reliant to start building the next civilization… Subsidies forcefully taken from one and given for free to the other increases the dependence of both, you subsidize unemployment you get more unemployment, you subsidize single motherhood you will get more single mothers, subsidize poverty and you will get more poverty, an end to subsidies is the end of sponsoring bad and unproductive societal behaviour, the only subsidy left is for producing and deflation and higher purchasing power for liberty and a life of independence… You will have no choice in any case… Eugenics over dysgenics…

Deflation and the adoption of a distributed and sovereign financial AND legal ledger AND currency system, banking and government are eliminated and with it 50-60% of modern Western economic Gross Domestic Product, which also tells you how much legal and administrative waste exists in today’s bankrupt socialist economies and how the employment sectors (jobs) of the future will be vastly different from the bureaucratic nightmare of today… The self funding mechanism for taxation and regulation was always inflation as bigger government was printed into existence, under Deflation currency is scarce thus government is scarce and because Bitcoin and barter cannot effectively be either taxed or regulated in the long run, deflation is the devouring monster of both taxation and regulation and therefore the devouring monster of government, obsoleting and making redundant vast swathes of bureaucrats, lawyers, accountants, regulators, and sweetest of all, the taxation apparatus (HMRC, IRS)… All those private services publicized or nationalized over the twentieth century of unhinged and out of control governments will revert back to local and private services, from refuse collection, to road maintenance, to private welfare (charity), private doctors, physicians, surgeons, etc… The trend toward deflation, decentralization and distribution of both currency and property is too strong for any government to fight either individually or in collective, but we cannot know how long this will take or how it will vary between countries and populations, that is down to the politicians and bureaucracy…

Deflation And Gender Roles – Male AND Female Independence

The traditional gender roles pre 1960’s and 70’s was a bread winning husband and the wife as homemaker, a one income family household and stable purchasing power and affordable capital (life under the Gold Standard) making family formation and a relatively comfortable life with balance between work, leisure and raising children… This traditional order was fractured as we headed through the Stagflationary Seventies of catastrophic inflation and loss of purchasing power which forced vast segments of women over the West into the workplace for the first time in human history (outside of war) and coupled with the ideology of Feminism directed from up on high to expand the workforce and tax base in a time of increasing inflation and poverty, with this mass of additional workers mostly concentrated in the public services, local authority administration, public school teachers, social services, university professors, nationalized industries, etc, etc… The increase of women in the workforce co-incided with the increase in government spending and employment and both were and are symptoms of the cause, the end of the Bretton Woods Standard and unlimited money printing that nearly hyperinflated in the late Seventies lest we forget (and would have without Paul Volcker), so the obvious question would be what happens to female employment that is heavily subsidized by taxation (and men) when deflation renders taxation, regulation, and this gender subsidy void? The answer should be clear, the female “independence” movement that in reality merely replaced men and husbands with government and state welfare and jobs will come to an abrupt end along with their perceived independence, and true to nature will return their dependence on men again, fathers, husbands and sons… Family formation under deflation becomes far more comfortable with the incentive to work less and spend more time with the kids (for both mothers AND fathers) and is at the polar opposite of today and inflation where both parents working more is the norm to compensate for falling standards of material living… As opposed to the conventional “wisdom” that working more is freedom and “free markets” that has been indoctrinated into men but even more so into women under the facade of “equal rights in the workplace”, working more is serfdom and dependence with your quality of life in your dwindling hours outside of work being severely diminished and often ending up in break ups of families who have worked themselves into the ground, male and female independence is found under deflation and the incentive to work less, and increasing hours of the day not having to produce… I cannot fathom the mindset of someone who would prefer to work for a living over not having to work for a living…

While male and female co-dependence is by the structure of nature and history in-built to a large measure there will always be those who do not want a husband or wife, want to live alone and do not wish to have children and derive independence in the truest sense of the word, for these men and women deflation will provide an in-built protection against dependence and poverty as savings (what you have produced) increases against the costs of survival and living, so that the incentive is not to work more but to work less, not to increase productivity but to decrease productivity… In an economy free of government ponzi financing the market of jobs and trades will revert to nature and what we could consider traditional industries and life requirements, agriculture and food production, energy and transportation infrastructure, architecture and construction, clothing design and manufacture, household goods, healthcare, education, and so on, with administration jobs and work (bureaucracy) virtually eliminated the vast pool of “traditional” female jobs of the last two generations will disappear, so the job markets for women is going to look radically more different than the future jobs markets for men…

I also want to discuss the lowest professions of society that apply to both men and women, but in general women more than men, specifically the sex industry and what many would call the oldest profession: prostitution, pornography and the industry of sex in general, that has always been bolstered by inflationary monetary systems whether we are talking the last decadent days of Rome, the moral debasement and degeneracy of The Roaring Twenties, particularly in the hyperinflating Weimar Republic and which preceeded the rise of Hitler, to today, the modern world, the television and internet age where sex and pornography is everywhere… The rise of moral debasement and decadence is only another symptom of the debasement and degeneracy of the monetary system, and morality like everything else depends on the money… I do get the distinct feeling at times that Libertarians appreciation of Economic Marxism and their apparent blindness to the evils of Cultural Marxism has fostered the world view of sex work being more of a vocation that women choose rather than a vocation they are forced into to survive, women I would suggest do not choose to go into prostitution and pornography because they like it but because they are desperate for the money and willing to leverage their bodies as their collateral to survive… The sex industry is not glamorous and exciting but seedy and dangerous as the high addiction rates to drink and drugs and high suicide rates among male and female prostitutes and porn stars attests, it is in society’s best interest that it be minimized as far as possible not through laws and regulations but through the currency and incentive structure (and a free market in money and currency)… Deflation and scarce money, of increasing production and purchasing power moves the poorest and most destitute in society away from sex and exploitation and toward independence and lowers the time preference and reins in the more impulsive and destructive attitude toward sex and morality which de facto consumes the seedier sides of society, of prostitution and pornography, which consumes the exploitation and dependence of mostly women while also denying mostly men the temptation of acting out on their weaknesses and their base instincts… Money is the most important regulator of morality…

Deflation And Destroying London, D.C, Brussels

The first Central Bank was the Bank of England and it funded the Napoleonic Wars and Nineteenth Century hegemony by industrializing the domestic economy, inflation subsidizing the City of London, London and the South East by extracting the produce (through inflation, taxation and regulation) from the peripheries (Scotland, Wales, the remainder of England)… As I demonstrated in my inflationary thought experiment those who issue the currency and lie closest to the printing press are enriched with cheap money while those furthest away from the printing press are made increasingly poorer and fueles the inequality between both… London through its legal and administrative monopoly over the rest of the UK and the legal tender status of the Bank of England has grown to its status through fraud, engineered inequality and deception that is hardly known to anyone… The same is true of the US where the Washington DC Swamp as legal and administrative (Federal) capital in conjunction with the Federal Reserve System extracts the produce and wealth of what these sneering pillaging elites term “flyover America”, and redistributed to the bi-coastal elites in Washington, New York and Kalifornia… The same is true of the European Central Bank a far younger monstrosity that has barely been operating the last 25 years, but which has been utilized by the crazed Brussels elites to extract the resources of the European continent (through the Euro) to fund the politically correct and morally bankrupt new and improved Soviet Union… The population of the West, ONE BILLION in total, is hostage to and exploited by three major central banks and their inflationary monetary policy specifically designed to rape the peripheries while enriching the core in a way the Roman Empire could only have dreamed of… This laughable and bizarre set of circumstances has to be read to be believed and just thinking about it makes the un-sustainability of this monetary system more stark as more people wake up to what has been done to our money…

Distributed technology and deflation eliminates and remedies the central bank extraction rackets of London, Washington D.C and Frankfurt/Brussels, which will naturally have catastrophic consequences for these administrative swamps and capitals… Stripped of monetary monopolies I expect the desirability of these Cities to plummet and crater in terms of wealth, prestige and extraction capabilities leading to an exodus of population (or brain drain) and the cratering of real estate and property values... The major consequence of deflation will be the distribution of equality and wealth through the currency system nationwide, and to the peripheries where labour will appreciate and capital will depreciate, thus stemming the brain drain and loss of people and talent from rural areas to these administrative cities and capitals made filthy rich by the corruption of money and law… I look forward to it!

Deflation And Political Ideology – Beyond Liberalism and Socialism

It is important to try and differentiate between philosophy and political ideology and I make this distinction for Conservatism and Libertarianism which I consider both similar and complimentary philosophies and totally compatible with the feudal middle ages, of financial and legal sovereignty, of small and local government, of labourism and of conservation of market based legal customs and traditions based upon the concept of private property and ownership, whether owner (freeman) or renter (serf)… Liberalism and Socialism on the other hand should not and cannot be reconciled with either conservatism or libertarianism because they are entirely political ideologies, both children of the Industrial Revolution, and movements and later political parties (Liberal Party, Labour Party) to propagandize inflationism and centralization, Liberalism holding to a “small government and free trade” ideology while entirely justifying a central monopoly over both the law and money and the intellectual heirs of Capitalism, and Socialism (post Marx Communist Manifesto of 1848) developing as a public alternative to Capitalism with the elimination of the laws over private property and a monopoly over the money to be given to a nationalized central bank in lieu of a privatized (capitalist) central bank, and again with plenty of evidence of the same bankers having funded the writing of the Liberals and the Socialists you can start to get the feeling that both ideologies were in fact controlled opposition and two sides of the same coin so to speak… The so-called liberal ideology of Capitalism that ruled the Nineteenth Century came to be subsumed by the more illiberal and authoritarian Socialism and Marxism in the Twentieth Century, but the derivative of both goes back to this battle between the supremacy of capital and labour, of industrial progress or a labour based dark age economy, the problem with both being the ignorance (purposefully or not) of the monetary and banking systems of inflation and not deflation…

Under deflation this two centuries long struggle between capital and labour is remedied and rendered mute as is the politics of both, labour is de facto supreme over capital and so both political ideologies become defunct, the capitalists will lose the free market battle with labour and de-industrializtion while the price the socialists will have to pay for their labourist utopia is the complete decentralization of currency and the destruction of government social engineering power, and lets face it industrialization and the exploitation of labour exponentially increased under socialism which makes sense if you consider the banking origins of the bourgeosie early socialist writers… Political ideologies never forget are formulated and promulgated by factions of the elites and from the top down, while philosophies such as conservatism (Not to be confused with Conservative Politics or Parties that conserve nothing) and libertarianism are for the little people who wish to build civilization from the ground, and the bottom up… Libertarianism is NOT Liberalism…

Deflation And The Austrian School – Rethinking Progress

The founding of the Austrian School was upon the Marginalist Revolution (1870 onwards) and the debunking of the Labour Theory of Value that was the foundation of Classical Economics (and Marxism), and while Marginal Utility is no doubt the derivation of value to a larger extent than labour in the modern world, I cannot help but feel that the Austrian School has become more and more muddled concerning this seeming contradiction of on the one hand espousing a free market in money that would implicitly mean deflation and rising purchasing power of labour as the foundation of society while on the other hand becoming devoted to the cult of capital and productivity and nearly cheering on the rise of the machines while being ambivalent toward the labour that has become sub-ordinate to them since the end of their beloved Gold Standard… The Austrians that have followed Menger and Bohm-Bawerk that includes Mises and Rothbard have been preaching of free market capitalism in the age of credit communism, the Austrian School was born at the end of the industrial revolution and thus as English Central Banking spread its inflation and inequality to the rest of the West, Mises lived in the paradigm of inflation as did Rothbard and every Austrian of note in between and since, they have all witnessed and lauded capitalism which is in my opinion inimical to human liberty and health, while ambivalent toward labour as a socialistic and out-dated concept… The Austrians have become the biggest cheerleaders of industrialism and capitalism, of centralization and wealth inequality that has ruled the last two centuries and this I believe is because of the fundamental mis-understanding of how money and credit works, specifically with regard to the interaction between capital and labour… While it was Mises who literally invented Austrian Business Cycle Theory nowhere have I seen in his work or anyone else since on how inflation pumps up capital while simultaneously debasing labour and how in a free market of money and credit this would be impossible… If you are writing about free market economics under a central bank monopoly over a nation’s currency, then what free markets do we in fact have?

Deflation and the coming digital dark age (another bug bear for hard money gold bugs) and truly free currency and legal markets will reverse all the ills of capitalism and of the Austrian school, the rise of Labourism and the fall of the machines and cratering productivity as the increases in purchasing power devalue the value of capital and machines, economics becomes less about quantitative (mass machine) production and more about qualitative (individual labour) production and thus the derivation of value and price discovery mechanism of society shifts from marginal utility toward the labour theory of value… Indeed in a true free market where there is increasing wealth (debt is NOT wealth) underpinning the economy and translated through deflation to all its users equally prices become less sensitive as input costs become less sensitive, consumers can afford to invest in value and in individualism, that is labour based economics over the economics of machines, mass production and marginal utility… I would urge Austrians not to spit the dummy at my disgraceful heresy and my soiling of the legacy of some of the greatest minds of the Twentieth Century, but to actually think about what I am trying to say here, many of the principles of deflation and free markets are at complete odds with the Enlightenment and Liberal Whig Theory of History of Progress that has always been intertwined to some extent with the Austrian School, while we are actually entering a digital dark age when the laws of economics that ruled the Enlightenment that are the function of its currency system, are turned upside down… This will apply to the teachings of the great Austrian Economic School of modern history, of which I am one of its most thankful and grateful disciples…

Conclusion

For all my years reading and writing on Austrian economics and anarchism I believed that the problems within society were exclusively due to the government and that STATISM! was and is a mental disease to cage its animals and to keep the slaves on their plantations, but as an Anarcho-Capitalist (more specifically an Anarcho-Feudalist) I am here to tell you that government is only a function of the money, government can be centralized and used to extract and exploit or government can be decentralized and used to protect and enrich, government is eternally required and will exist… The governments the West have suffered since the Reformation that was one of the first inventions of post Double-Entry Book-keeping ledgers have grown tyrannical and exploiting in lock-step with banking tyranny and exploitation, the problems plaguing and consuming modern society is not governmental it is the banking, accounting and legal apparatus which funds this method of government and governance… The development of Bitcoin and deflation, the decentralizing of currency, law and accounting also means the end of currency debasement, taxation and regulation, and so government can only scale to the extent of its voluntary contributions, otherwise stated a voluntary state and society… Government can scale to local kings, justices and arbitors for property disputes, to private police, sheriffs, and protection for property protection and dispute, to local lawyers in registering property to negate property disputes, and either voluntary communal charities or privately funded local companies to maintain infrastructure and collective institutions such as churches and schools, but it can scale no further… When you interpret the history of government and governance through the lens of money and credit creation and control, then government becomes transparent and is revealed as merely another by-product of the age’s monetary policy…

I find it increasingly amusing and gleeful that there are increasing rumblings in both the mainstream and alternative media about the threat of Bitcoin bringing on a new dark age… Martin Armstrong has discussed it so has Nobel Laureate Robert Shiller and the WaPo’s Matt O’Brien and the outright fear of no banks, no debt and no lending, because the inherent fraud, centralization, inequality, rent seeking, and exploitation of the history banking is a good thing right?! A world without banks is a world of labourism, of financial and legal sovereignty and of private property that we do not have today and have not had for five centuries and the end of the last dark age… Dark ages are for the little people, when Empires are unable to form, and when debt and usury cannot be utilized as a weapon to enslave one group in order to enrich another group, the whole schtick of the apocalyptic scribblers who warn of the coming return of feudalism is that debt is wealth and banks are good and that no debt and no banks is bad, and yes for these scribblers and their benefactors it may well be a disaster but for the average citizen who works his labour to produce the capital he requires for a family and a productive and enriching life and legacy, this is an utopia not a dystopia… The scribblers who warn of Bitcoin’s dystopian dark age should think some more about the question of dystopian to who? Bitcoin is the dystopia of the Elites…

In the medieval era based on natural and local laws there was the concept of the Commons and communal land that was owned by no-one but could be utilized by anyone as a common and public resource and this concept was maintained for centuries, however with the rise of banking and reformation came the weakening of the feudal laws protecting the commons with progress and Levelling (another forerunner of Liberalism) and the gradual eradication, walling off and bordering off (fields) and the privatization of the commons… The concept of the commons was lost and was indeed spun by the Enlightenment into The Tragedy Of The Commons, when communal resources wherever encountered will sooner or later be seized and privatized, in effect the lesson that is taught by many historians and economists is the futility and impossibility of a sustainable commons or communal property… I consider the return of decentralization as the rediscovery of the commons not on the physical but on the digital plane, the internet being the digital commons that facilitated peer to peer informational exchange and peer to peer trade (although with centralized and privatized infrastructure, but only for now), but Bitcoin weaponizes peer to peer barter and private contracts and a completely decentralized and deflationary financial and legal system on a global scale, and so as adoption increases then so does the utility and will to maintain and improve the commons, a communal resource, a communal ledger and legal system, a communal and deflationary currency with all of its miraculous remedies for today’s built in inequality and exploitation…  This is the central concept of the commons and of the digital dark age: equality under the law, with every transaction and private contract irreversibly and immutably verified by a distributed electronic ledger, and a meritocratic social order where there are no barriers to success and social standing and where men and women are inherently unequal, but this is inherent inequality has and always will exist, what has been missing these last five centuries since the Reformation is equality under the law, when monarchical absolutism usurps common law and the backdoor to which currency controllers can implement their totalitarian dreams of monetary monopoly… Bitcoin is a public ledger with private owners, while Central Banking is a private ledger with public owners (legal tender laws)… The digital dark age and Counter-reformation can only succeed by the commons and its future is dependent on the human population to adopt and maintain and improve this commons for the common cause that benefits the common people…

One of the biggest misconceptions of history is that the move from Feudalism and Conservatism toward Enlightenment and Liberalism was progress, a progressive move from the dark to the light, and so the hallucinatory Whig Theory of History is the greatest mind trick and intellectual cover for centralizing power and the corruption of money and law that is the unmistakable mark of what they have deemed progress, that is serfdom, dependency, poverty, industrialism and machination, cratering purchasing power and the debasing of labour, and spiritual and moral debasement… The new dark age is a move away from this Enlightenment, against money lenders and usury, against exploitation and corruption, and most importantly against Progress, deflation being a highly reactionary, conservative and regressive phenomenon sanctifying and protecting the labour of the common man, stabilizing families and populations and incentivizing the conservation of craft and local small business, with customs, trades and skills passing from generation to generation and within families, and the opposite of the progress that dismantled labourism and instilled capitalism throughout first the West, then the world… Progress is the cancer, and Regress is the cure…

The last five centuries were a diabolical aberration from the natural order of monetary and legal self governance and should never have happened, but it did… Monarchy should never have usurped the laws that led to the institution of central banking that weaponized the twin pillars of warfare and welfare that propelled us into the insanity of the last century of the industrial orgy of death and dependence, but it did… It was out of the mass genocide of the second world war that Military Intelligence developed the primitive computer which seventy years later has developed into mass manufactured laptops and smartphones which otherwise wouldn’t have happened… It was also Military Intelligence that developed the first prototypes of the internet and of cryptography on which Bitcoin and its blockchain is based, and again all this should never have happened, but it did… We should never have had to live in a modern world of digital technology, subordinate to machines and with near every waking hour spent looking at computer or smart phone screens, our brains bombarded will all sort of distractions, psychological operations and propaganda brainwashing, but here we are… We would not have the internet and we would not have Bitcoin if history had have taken a different turn, and the cancer of progress somehow reversed, yet it wasn’t… We are where we are because of the course of history for better for worse, we live in a post industrial digital landscape that both we and our insane and inbred ruling elites are entirely dependent on, and so for now at least our fates are intertwined… The technology unleashed by two centuries of industrial manufacturing and industrial war have developed the technology that now allows the population at large to dis-intermediate banks and governments and to embrace and adopt the deflation that sets them free and promotes liberty, property and labour and that cannot be effectively controlled or co-opted by the designers of our modern world… What a time to be alive!

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Postscript: Audio podcast for this post.