<nettime> Bravo, Satoshi

[Brian Holmes via nettime-l <nettime-l@lists.nettime.org>]

For Ludwig von Mises - the Austrian grandfather of neoliberalism - gold was
the perfect stateless currency. He called it "sound money": an
incorruptible metal, intrinsically valuable for its rarity, tradeable at
will on private markets, effectively bypassing the fiscal demands of social
democracy. Gold, for von Mises, was a truly universal medium of exchange,
unbound to any political power, and crucially, to any constituency of "the
people" who might make demands on the upper classes. In short, it was the
anarchy of the rich.

For many, that was exactly the promise of cryptocurrency. And it held a
real attraction for the hackers who invented and developed it: because if
it all worked according to plan, it was going to make you a very rich
anarchist indeed.

The promise was blinding. First of all, it left developers and early
adopters entirely blind to the ways in which Austrian economics were
transformed by, not the grandaddy, but the sugardaddy of neoliberalism, its
real abusive arrogant boot-licking patriarchal father: Milton Friedman.
This guy was a post-WWII American, and the last thing he wanted to give up
was the wealth and the power embodied in the US dollar. So what did he do?
He privatized the dollar itself, he transformed the dollar into an asset
class by inventing currency futures. Now all the bomber-backed security of
the vast US economy could be turned into a contract, a formula, a kind of
mathematical token tradable by private persons on private markets. The idea
here was no longer to smash the state. Instead, just use it as a platform
to launch your own enterprise beyond its control. The state as moonshot for
private enterprise.

Ideologically, the founders of crypto bought von Mises. A very dubious and
even sickening buy, from my powerless and out-of-it viewpoint, as I watched
the crypto craze unfold over the 2010s. I guess the crypto craze produced
some rich anarchists, which, depending on the case, could be a good thing.
What it did not produce was a stateless currency.

One of the things that everyone has learned about online markets is that
you never really know what you're going to get in the mail. If they thought
at all, people thought they were buying von Mises. What they actually got
was Milton Friedman. Beyond Bitcoin, crypto has now evolved into a
dematerialized global currency, so-called stablecoins that can be used as a
unit of account, a store of value and a medium of exchange by people in
almost any country. Unfortunately there is a very big catch. Stablecoins
are stable because they are based on central bank assets, and primarly on
US Treasury bills. The coins are cheap to use, because every time you buy
one, the issuer uses your money to buy US debt; and for the entire time you
hold that coin, the issuer earns interest on that US debt.

This appears "unfair" to all those poor slobs in the US who suddenly
realize, "Oh, we citizens whose taxes are used to pay interest on the
national debt are actually paying these other folks from other countries
who are ditching our currency." Well, yes, that's sort of right, but that's
not the half of it. The reality now is that all the poor libertarian slobs
across the world who switch their assets to stablecoins are actually buying
into the maintenance of US dollar dominance, by propping up the flagging
demand for Treasury bills.

This partially unconscious support of the US state is not a geopolitical
bug. It's a feature. The stablecoin strategy, codified by the GENIUS Act
that Trump signed into law last July, is the contemporary equivalent of the
1980s "monetary turn." In that incredible bait-and-switch, Friedmanite
neoliberals opened wide the financial markets of the United States at a
moment of extreme weakness and staggeringly high (indeed, jacked-up)
interest rates - as though they were capitulating to the power of foreign
economic actors. What they did in reality was to attract and then hold
capital from across the planet, in order to refloat the collapsing US
economy. When it was all over they even had enough money to get over the
Vietnam syndrome and eventually fund a few more devastating wars. Well,
what do you see going on again today?

The US has destroyed its own hegemony, that is, the good credit it had in
the eyes of other governments around the world. Its economy is clearly
headed for collapse, with the growing threat that foreign governments will
withdraw their money from a broken bank. And what made Trump think he could
declare the law of the sword, unleash the military anywhere he wants (even
at home), and escape sanction by all other societies on earth? What in
particular made him think that countries such as Japan and China would
continue buying US Treasuries to support unhinged brutality across the
planet? Well, crypto made him think it.

Trump was initially an enemy of crypto. He channeled his populist base to
insist, rightly, that this was a scam, a trick to replace the money that
you have, and that is at least nominally under democratic control, with
money that other people have, that you will never see, and that will manage
your life down to the smallest details. That was Trump on the campaign
trail. However, as soon as he entered office he got the bond market talk
traditionally delivered to the president by the Treasury secretary. It goes
like this: "Dude, you have great ideas, but how you gonna pay for them if
no one buys your bonds? How exactly you gonna keep your economy from
collapsing?"

Bill Clinton famously got the bond talk from Richard Rubin, and he gave up
all his social democratic ambitions to become the president of casino
capitalism. With Trump it was different. It was a lot more like Paul Volker
talking to Ronald Reagan in the early 1980s. Treasury Secretary Scott
Bessent undoubtedly asked Trump, "Dude, where you gonna get the money to
keep your economy from collapsing?" But he doubled this implicit threat
with an extraordinary promise. "You alone can do this, because you are a
GENIUS," he must have said. "You can do exactly what you want, and the hell
with Japan, China or the European Union. You don't need them to float your
wars. Because private people across the world, disgusted with their own
governments, are going to buy tokens. And here in Washington, where we've
got the power, we are going to mandate that all those tokens be backed up
by our Treasuries. So they are going to pay your expenses by propping up
your exorbitant debt with their ill-gotten financial gains, and even for
all those desperate people down in El Salvador or Argentina, with their
life savings. The beauty of it is, they're not even going to know that.
You're gonna sell 'em von Mises. They're gonna buy Milton Friedman. I
cannot guarantee you how long this is going to last. But boy oh boy, you
are going to have one hell of a presidency!"

This is where crypto is at today. We could talk about whether the strategy
to maintain dollar dominance is going to work (which there is a chance that
it will, unfortunately). But the point I want to make right now is where
the crypto dreams have landed. It's not stateless currency. It's not
anarchy. Instead it's a bid to save the abusive US state by drawing
directly on the wallets of often rich but always democratically
disenfranchised people across the earth, people who are willing to trade
democracy for fascism in hopes that their money will be safe in a distant
blockchain bank. It's a bit like the way we all wanted free and open
communication, but we got social media. With one big difference. This time
around, you should'a knowed it in advance.

Bravo, Satoshi!

***

This off-the-cuff text was inspired by bootless rage, plus a particularly
brilliant essay I read this morning:
https://harmoniousdiscourse.substack.com/p/the-shadow-dollar-how-the-power-to
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