Parallel Banking System
DeFi will be a transitory tool to accomplishing our ultimate goal of autarky.
Trudeau’s heel-turn into tyranny against the truckers was most easily-seen in the freezing of many of their bank accounts. This is probably the most powerful, and simultaneously easy, way to control your enemy. If you literally have direct control over their bank accounts, where probably most or all of their savings is kept, then all it takes is the click of a button to backspace their bank deposits. It’s that easy, all that has to happen is for a metrosexual tyrant to command banks to just log on to their employee account and hit backspace on these poor saps’ checking account balances.
The money you have in the bank isn’t represented or “backed” by actual cash. It is really just numbers on a screen that, when you use your debit card, the central bank reserves of the bank you use are transferred to whoever you are patronizing, and your bank deposits are essentially just deleted. There is no magic behind the scenes - it’s as simple as you think. What backs your checking/savings balance is just central bank reserves. For instance, the reason Lehman Brothers and Bear Sterns collapsed so quick was because people were converting their bank deposits into actual cash, at an exceeding rate, but these poor banks couldn’t honor all that cash because they had to sell off whatever assets they had to honor all the money that was being drained; assets that were losing value, and limiting how much cash Lehman or Bear could dole out. This was made worse by all the bad collateral (mortgage-backed securities) they had, and the price of their bank money was worthless, which costed a lot of customers’ their livelihoods.
Anyway, that’s a very simplistic rundown of what is actually going on in your bank. That is why it is very important that you understand it is directly monitored by your bank and the government. Everything happening in your account is directly accessible and trackable due to the money your using just being digits on a screen that the bank creates. This is why when you get to the barebones of it - the money in your bank account is not your money. It is money that the bank “owes” to you. You quickly learn how much it is not your money when you just go ask for it from a bank teller, and realize, there’s all kinds of waiting periods, regulations, fees, and interrogations you have to deal with.
That is why, if we are to construct a system that we can all use in order to exit from the economy, and not be overly-regulated or have our bank accounts frozen outright, then we have to get creative on what money we use. There is no law that says you are legally-bound to use the dollar in all transactions. Ironically, our very own Constitution says that the only form of money to be minted is gold and silver money, and it must be minted by states, and not the federal government. So, if the federal government is breaking one of its most essential monetary groundworks, then I don’t see why we can’t not use the dollar.
Rather, the dollar will not be kept out, but just banking, and that’s where a very contentious, but important discussion must be had, on how we will be able to securely construct a parallel economy and our own high finance. TLDR; it’ll have to be creative.
Crypto and stablecoin are good options if you want to be under the radar, but you don’t want to hold it at an exchange, and stablecoins which would be ideal for trading, are generally all backed by dubious assets that don’t quite back 1:1 how much of their stablecoins have been printed. The prime example is the most popular one, Tether (USDT), which has an absolute rabbithole of dubious, shadowy backing that probably will end in a 19th-century style currency panic, but much much more painful.
This is where goldbacks might be of use. Utilizing gold as a direct way of holding our wealth and transacting would be key, and is most definitely a start. Ultimately, all forms of decentralized finance (DeFi) will be useful, whether it be cash (foreign or domestic), cryptocurrency, barter, or precious metals - there’s all kind of creative ways that we can hold our wealth, and utilize it in trade, but decentralized finance, though it might operate well in an era of low trust, it is important that we have some level of centralization to encourage high trust and growth in our communities.
For the average person who would find much amiability to our cause of parallelism and building traditional communities, for them, being given a lecture course on what to do with their wealth, and instill a sense of mistrust as a grounding is not a good way to reach out to them, nor a good way to lay groundwork for your new society. Money needs to be simple and easy to use. It is better that we have community banking, much like Germany does, which help instill such values of togetherness and trust in German communities.
That being said, what we must start thinking about is how we will ultimately, in whatever parallel societies we build, to switch gears into localizing our finance, so that formal investment can actually be had, and there isn’t this libertarian literalist ideal of only entrusting the self and no one else with one’s wealth. This will ultimately culminate in the need for a currency that is separate from the dollar, but just as functional as the dollar. Whether we have a 100% gold-backed currency, a hybrid of silver and gold-backed currency, even more of a hybrid where we back it with a mix of dollar reserves/gold reserves/silver reserves/crypto reserves, the idea must be explored. This is one of the very first institutions and pieces of infrastructure that could induce growth in a way that speeds up the process of growing trust, and incentivizing risk and financial unity.
It goes without saying that we must also have some level of a obligatory charity, or what Islam calls “zakat” where everyone of a certain status is obliged to give a certain cut of their earnings to the poor. The obvious downside to this is those who are the “poor” get labeled as such and it takes quite a toll on their confidence, and honestly, is just a way to shame poor people. Nonetheless, “obligatory charity” in the sense of having a treasure chest to take out of when necessary is par for the course in growing trust. It would have to be a somewhat negligible amount as to, most certainly, prevent the overgrowth of unapplied/uninvested wealth, and prevent an incentive for the poor to stay poor.
Nonetheless, a creation of a localized currency is inevitable, maybe affectionately-named “The Based Currency/Dollar.” I think due to the amount of hard money advocates and diehard monetary idealists the idea of centralized finance is scary, but I’d like to remind anyone who doesn’t live in reality, or who might not know the trend of history, but wealth will always be centralized in a few, and agreed-upon currency will always be a centralized note from the state. Whether it pains your little idealistic heart, or not, that is the fact, and for humanity to just up and become high-trust, highly intelligent beings with perfectly-functioning technology and somehow agree how a cryptocurrency will be equitable to its users, given a proper price weighting if it were to become a money in place of the dollar (everyone forgets crypto is all priced in fiat), and won’t just end up centralizing wealth in an anonymous few, I really couldn’t care less. Money has to be nominally-trackable and in the hands of an accepted authority so that taxes can be paid, and for banks to create wealth through lending (money creation).
Pretending that you can just create a perfect hard money that will benefit everyone is a libertarian fantasy, and honestly, libertarians should just stay in the peanut gallery where they belong, they constantly corrupt a very important conversation that must be had by inserting their starry-eyed, “every man a king” NAP delusions. If that isn’t you, but you somehow reconcile that decentralized finance will be the future, then again, please just stay in the peanut gallery where you belong. There will always be power, there will always be coercion, and there will always be feuding. To think you’ve solved the ultimate 10,000-year monetary problem is endearing at first, but just becomes frustrating when your fantasy is based on some Marx-esque cataclysmic event where we will all just adopt Bitcoin or Ethereum out of necessity, and just wouldn’t go back to barter and precious metals.
Ultimately, the DeFi issue will culminate in something worse for societies who legitimately try to adopt it as anything other than a ponzi scheme or proxy for a gambling addiction. That is what crypto is tainted by - it is a speculative “asset” that people don’t hold for any other reason than to speculate. DeFi will just lead to permanent low-trust, and lending will become a shady industry no one wants to partake in culminating in absolutely no growth or positive direction for whatever civilization adopts it as an icon of their constitution or beliefs.
Fiat currency is as old as the hills, and will continue to be the best patchwork for a species of complicated, cutthroat bastards. Just read Leviathan and conflate what he speaks about government and the human condition with how money operates, and you’ll understand there must be an iron fist somewhere along the line that prevents secrecy, stagnation, and currency panics. That is why, if we are to get anywhere, conversations about a “based bank” or “based credit union” will have to be had seriously, mulled over elaborately, and allowed for a semi-hard money fiat currency from a based bank to allow the printing of growth to ensue.
“The power to do good is also the power to do harm.”
Milton Friedman