Our Belief System, The Monetary System and the American Hegemony
Civilization scales in layers. Layer zero is the people’s belief system. Layer one is the monetary system. The other parts of a civilized society scale upon the monetary system.
Today’s world order is effectively a hegemony ruled by the US. This piece dives into the following questions:
What was the belief system and the monetary system that formed the basis for the American hegemony? And what is it that makes this hegemony so vulnerable today?
To get the proper perspective we have to look back in time.
The first example of government monopolization and political debasement of money was probably the Greek citystate of Athens, some 2500 years ago.
It’s difficult to know what it was with their belief system that led to this decision. But the state used the policy to finance its ambitions to rule others and the Peloponnesian war against Sparta.
In the end Athens lost, but the inflation policy spread.
The Roman empire also financed its wars in part by debasing the silver coins. Many books and articles have been written about how the inflation policy also brought it to it’s knees.
We don’t know for sure which belief system that was the basis for the Romans’ choice of monetary system, but once more we see it’s intrinsically linked to war and domination.
My region, Trøndelag, in the middle of Norway, probably was one of the last civilized areas in the West that had monetary freedom – the right to use whichever money people liked best. The people used money from many other countries and they preferred money with a high share of silver or gold.
We don’t know for sure which belief system this freedom was based on. But it was likely closely linked to the fact that the Trønders loved their freedom and hated kings.
It has been said that the Frostating law’s resistance provisions, which secured the freedoms of the Trønders, was unique. I’ll explain shortly what these provisions said, but let me just say that I find it very likely that it has been the same principles that have governed every free society before they fell under the rule of kings and their inflation policy.
The resistance provisions basically obliged each and every Trønder to kill the king, if the king took someones property without the consent of the Frostating, which was the regional court and assembly of free farmers and landowners in Trøndelag.
If the King didn’t adhere to this rule and lay claim to someone’s property it was also the duty of each and every Trønder to pass on the war arrow that would be cut, bring it to the neighbor, and saddle up, ready for hunting down the King and his men.
Our royal sagas has strangely enough preserved a story that demonstrates the effectiveness of my ancestors’ rule of resistance: In the 8th century AD they were invaded by King Øystein of the Uplands. He appointed his son as King of Trøndelag and went home.
As soon as the Trønders got the opportunity, they killed their new king. The reason was probably that the resistance provisions still applied, and that the duty to kill the king didn’t stop when the war ended.
These principles ensured two things, that kings had little or no power in Trøndelag and that the people enjoyed monetary freedom. This suddenly came to an end in 1050 AD when King Harald Hardråde took power, immediately introduced inflation as a policy and readied his country for war. It all came to a bloody conclusion in 1066 in the Battle of Stamford Bridge. King Hardråde lost the war, many thousand Norwegians were killed, and the Viking Age came to an end.
We see that the monetary freedom was based on a simple code of conduct: Kill the King who doesn’t rule by consent. If you didn’t obey the code, you would be punished with harsh fines. You would probably also lose the privilege of being protected by your neighbors.
The inflation policy, on the other hand, was based on King Hardråde’s political ambitions, most fundamentally his obsession with ruling over as many peoples as possible, including the English.
We have later had a few examples of monetary freedom, in the golden age of the Dutch in the 17th and the early 18th century, and a de facto policy of monetary freedom in the US in parts of the 19th century.
In the Netherlands this rule grew out of the rebellion against tyrannic inflationist kings and emperors. The rebels were inspired by monetary freedom traditions that could be traced back to the 8th century AD in a part of India that was ruled by Muslims.
In the US, the de facto principle of monetary freedom was indirectly protected by the Constitution and the Bill of Rights, which secured that the state would have very little power over the people, at least when it was compared with the inflationist monarchies of Europe. It was probably of great help that several of the founding fathers meant that inflation was a crime against humanity.
The combination of the 200 year long tradition with central banking in Europe and the introduction of the gold standard across the whole wide world in the 1870s undermined the de facto principle of monetary freedom in the US. When the Federal reserve, the first real central bank in the US, was created, and the World War I broke out on the 28 July 1914, the last nails were hammered into the coffin of monetary freedom.
From that day on, we have in reality been on a globally coordinated inflation policy, first dictated by the British, and later by the Americans.
To sum up what we have looked at so far, monetary freedom has grown out of peoples’ desire of freedom in general, and the acknowledgement of the simple fact that you are obliged to fight for your freedom if you want to keep it. We can call it the Code of Resistance.
On the other end, the inflation policy goes hand in hand with war, aggressive foreign policy and suppression of individual freedom. We can call it the Code of Coercion.
These two very distinct monetary systems and the codes that they are based on, spring out of two very different belief systems – individual freedom and worship of the state.
Let's now jump forward to today’s system. The specific geopolitical system that we have now, is scaled upon a very specific monetary system, which again is scaled upon a very specific belief system.
The geopolitical system that we have today is what American neocons, such as Biden, Blinken and Nuland, often refer to as «the rule based order». This is in essence a system of American hegemony where the US dictates what the rest of the world is allowed to do.
The American hegemony is scaled upon the monetary system that we basically can call «the dollar standard». In practice this system implies that the US and it’s closest allies, which are mainly all the English speaking countries, the EU and Norway, inflate their currencies in a controlled manner, meaning – at a tempo that isn’t too high.
This enables them to maintain relatively strong currencies. In turn, this enables the US to force its inflation upon the rest of the world. Their most valuable export commodity is the US dollar, which the Federal reserve and the private banks «print out of thin air».
In return, the rest of the world exports commodities and various other goods and services back to the US.
The euro area countries to some extent enjoy the same benefit with the euro, which is the second biggest global currency.
The rest of the worlds’ governments enjoy the benefits of inflation too, but their policy is more concentrated. With the consent of the US and the EU they debase their currencies at a high speed. This extracts most of their own people’s wealth, into the state coffers and the pockets of the country’s wealthy elites. At the same time it ensures that their currencies have low value compared with the USD and EUR. This, in turn, means that the USD can continue to enjoy its status as the world’s dominant currency.
If we simplify our analysis, the global dollar standard can be defined as a symbiosis between the US and it’s right to exploit the rest of the world by exporting its inflation, and the other countries’ right to exploit their own people by debasing currencies that to a much less degree is used beyond the borders of the national states.
The effect has, among others, been that very few developing countries, which mainly consist of former colonies, have been able to build capital and become industrialized. Lyn Alden and Alex Gladstein have been instrumental in sharing this knowledge with the rest of us.
This brings us to the next subject: Layer zero today.
The first question we need to ask is which specific belief system it was that the dollar standard was scaled upon.
In such a short piece I will once more have to resort to simplifications, and I’ll first zoom in on the birth of the dollar standard.
Today’s monetary standard was conceived in war. When the Bretton Woods conference took place in July 1944, it was relatively clear that the allied forces would win World War II, but that this depended on the continued support from the US.
The 44 allied states who attended the conference established a quasi gold standard. In practice it meant that the Americans could inflate its currency using gold as a fractional reserve. In turn the other countries could inflate their own currencies, using dollar holdings as a fractional reserve.
All of the countries, including Soviet Union, agreed on these principles and signed the treaty. I would say that the belief system that underpinned this decision, that is – of the country’s rulers, likely was, firstly fear, because if they didn’t support the proposal the US could make it more difficult to end the war, and secondly, greed, because there in reality wouldn’t be much of a restraint on their ability to extract wealth from their own citizens via the inflation policy.
What happened next was that the US delivered on their promise to end the war. However, they did much more than that. When American airplanes dropped nuclear bombs on Hiroshima and Nagasaki in August 1945, the US administration also demonstrated an unprecedented ruthlessness. This must have aggregated peoples’ fear of the new superpower.
It can be no doubt that this aggressiveness made it easier for all of the parties to the Bretton Woods agreement – with the exception of the Soviet Union – to ratify the treaty. On the 27 December the agreed upon threshold of signatories was met and the establishment of the quasi gold standard was a fact. Russia joined the Bretton Woods system in 1992, following the collapse of the Soviet Union.
While the dollar system was conceived in war and a final act of terror, it would for a long period be maintained first of all due to greed and fear. The fear part needs a few comments.
When the Soviet Union abstained from ratifying the Bretton Woods agreement, this went hand in hand with Stalin’s ambitions to further the idea of national and international communism. The combination of the cold war and the many proxy wars between the two super powers that followed after World War II, meant that the Western countries and most of the rest of the world solidified their support of the dollar based monetary system.
Thus, fear of global nuclear war, and dependence on US military protection against the Soviet Union, was the belief system that the dollar system now was scaled upon.
When the Soviet Union and the East Bloc countries imploded, the US neocons took the concious decision to support some countries, such as Poland, financially, but not to do the same to Russia. The consequence was that hyperinflation broke out in Russia. This sparked political turmoil, which paved the way for a weak oligharchical political system that would keep the Russian bear dormant for a long period.
At the same time, the US neocons established close ties to China. The deal was basically that the Russians should be shoved into the cold, that China should accept dollars as payment for consumer goods and buy US treasuries, in exchange of the US making it easy for Americans to buy Chinese goods.
The flipside of what later has been described as the «Chinese Miracle» was that the Americans were turned into consumers who deindustrialized their domestic economy.
It can be argued that the belief system that the dollar system was scaled upon during the last 30 years to a large extent was consumerism and a continued effort to ensure that Russians was perceived as a threat to the west.
As Lyn Alden points out in her recent book, Broken Money, the dollar standard has also been kept alive by military intervention in countries that tried to opt out of the dollar, and American-led economic sanctions.
What happens today is that the dollar system runs out of legs, and effectively stears into the abyss. The six features described below are IMO the most important driving forces:
1. The enormous US public debt, which has been monetized by the Federal Reserve’s and other central banks’ moneyprinting.The debt currently sits at about 130% of GDP. Many leading economists today argue that the debt is unsustainable, and that it will continue to rise as the federal government is forced to print money to pay interest and cover other costs, such as the unfunded liabilities caused by the social security system and more. This constitutes what we can call a threat of internal economic implosion, which was the fate that the Soviet Union and the East Bloc countries succumbed to.
2. The reduced ability of the US to weaponize the dollar, due to deindustrialization and a significantly lower manufacturing capacity that the US needs to wage wars that can support the dollar’s dominance.
3. The BRICS countries want out of the system. This constitutes a decentralized threat on a global level against «the rule-based order».
4. The ongoing polarization inside the US federal republic, where some of the states dominated by the Republicans have decided that gold and silver is legal tender, support Bitcoin mining and block the introduction of CBDC. This happens at the same time as they wake up and realize that the exorbitant moneyprinting since before the Great Financial Crisis in 2008, has reallocated a significant share of the wealth from people who define themselves as Republicans to people who say that they are Democrats. (H/t to Balaji S. Srinivasan, who has shed light on this in recent podcasts). This constitutes a threat of internal political implosion.
5. The increased flight of capital into the two escape hatches of gold and Bitcoin. These systems constitute a threat against the dollar in terms of being competing monetary technologies.
6. The rapid distribution of knowledge about money and the effects of inflation as a policy. This constitutes a decentralized threat against the system, at a citizen level.
Although it takes time to stop the dollar dominance, the combined effect of these 6 pressure mechanisms is extremely powerful.
I believe that it again will be the belief system that decides which monetary system our children will have in the future. People’s knowledge about the effect of the inflation policy, item No. 6 above, is going to drive the processes described in No. 1 to 5. I believe that this is the main motivation when the US government and its allies currently spend so much political capital on limiting free speech.
As these developments unfold, I have decided to take on the role of an activist, or prophet if you like, who preaches the following two simple principles:
1. Civilization scales in layers. The people’s belief system is layer zero. The monetary system is layer one. The other parts of a civilized society scale upon the monetary system.
2. There are only two alternative monetary systems. On the one hand, we have monopolization of money with a forced standardization of which money that people can use. And on the other hand, we have monetary freedom, the right to use the money that we like best.
I have taken upon me to play this role, because I think these two principles represent perspectives that to little extent are reflected in the public debate today.
Although there is a growing realization of the fact that the monetary system has a huge effect on society, and that the current system is intrinsically antithetical to freedom, the significance of the system for the functioning of civilization and how it relates to our belief system is undercommunicated. By emphasizing this, I hope it can inspire people to focus on these two core principles when they dedicate their time and energy to changing today’s policy. I am convinced that having such a lazer-eyed focus will speed up the process.
Regarding the choice of monetary system, we basically have three camps today:
- The «fiat» camp, who consists of people who support the current system,
- The «goldbugs», who support the idea of reintroducing gold as a global reserve currency, and
- The «Bitcoiners», who hope Bitcoin can become a new global reserve currency.
Unfortunately, the «monetary freedom» camp is almost non-existing. The main reason for this, I believe, is the following:
- Rulers have carefully made sure to remove the traces of monetary freedom as a core feature of free civil societies
- The political elite has gaslighted the people with false economic theories and ensured that we have a total lack of education of the general public concerning the evils of inflation.
Luckily we still have a few resources about monetary freedom, which I also have described in Fraudcoin.
This should suffice for now. My upcoming book, Arrow of Truth - from Forseti to Satoshi, will shed more light on these developments throughout history, as well as on the importance of Bitcoin in shaping the future of our belief system and in turn, our monetary system.
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