Ray Dalio, the outspoken billionaire who has suggested governments should follow the Modern Monetary Theory (MMT), has come up with a solution to the populace inevitably escaping to hard assets to escape print baby Fed.
“If it becomes material, governments won’t allow it and they’ll outlaw it. They’ll use whatever teeth they have to enforce that. They would say, ok, you can’t transact in bitcoin. You can’t have a bitcoin.
So then you would have to be, almost like: is it a felony? And then one would have to be a felon in order to transact.
They outlawed gold! You know. What’s wrong with gold? But gold was a storehold of wealth.”
Gold remains a storehold of wealth and Dalio himself reminds us that is what central banks use to transact between each other because they can be sure the money, in this case gold, won’t be devalued.
At the height of the great depression, however, on April 5th 1933, gold was made illegal by executive Order 6102. All had to hand over their gold to the government in return for gov paper money.
That was their solution to the problem of: can’t just print. Dalio is suggesting that will again be their solution to the expected popular resistance against mass devaluation through the no constraint based Modern Monetary Theory.
“Funding such things with money printed by the central bank means that the government doesn’t have to worry about the classic problem of the larger deficits leading to more debt sales leading to higher interest rates because the central bank will fund the deficits with monetization (QE).”
So said Dalio in May 2019 while introducing the Modern Monetary Theory which basically translates to gov can print as much as it wants to fund government services, and then to maintain inflation in check, it can take money out of circulation through taxes, fees and licenses.
That translates to a command economy, pretty much as Karl Marx predicted, with the government having effectively absolute power, and unofficially, total ownership of the entire economy.
Dalio however argues this is actually how things work, not how they should work. That’s not quite correct. Money enters circulation through the dual system of central and commercial banks, not solely through the government.
It does through the government too in as far as the government spends more than it takes in, meaning borrows more, which translates to banks print more to lend to gov. However, gov has to pay back this money with interest.
Now, the central bank is buying back the money commercial banks lent to gov in bonds, something that gives the government a carte blanche to borrow as much as it likes without risking increased interest rates.
Dalio has called this the last phase of the dollar which is at the end of its 500 years cycle according to the founder of the world’s largest hedge fund.
So with that background, you’d expect the billionaire to be very fond of bitcoin, but of course he isn’t because he can’t control bitcoin.
For him and other billionaires, the system has worked too well. Their buddies at fed or commercial banks have given them a big chunk of the fiat block reward by lending to them as much as they want at usually very low interest rates.
This props up the likes of Dalio and neutralizes any risk through an inflationary tax that naturally falls almost exclusively on those not articulate enough to know how to invest to at least preserve value, but preferably to see returns.
Thus, any suggestion that this communism for the rich should stop has been met by MMT’s suggestion that all is fine, gov can just print as much as it wants, so maintaining this free money for the rich while the velocity of money plunges.
There’s just one big problem: bitcoin. The young in particular more and more are ditching the fiat rigged system in favor of this new code based digital money which they happen to run in their computers.
Every dollar put into bitcoin is a dollar taken from these billionaires and given to the middle class or lower, the smarter and more capable of them, of course.
Every bitcoin dollar goes to those that look ahead, not these old men who propose old and tried communism as a solution to the fundamental problem of interest based money, usury.
Every bitcoin dollar goes to voting for the prognosis of Hayek. Gov, even if they were angels, can’t manage the power to print very well. There must be free market money, he said, if there is to be a free market.
In the battle of ideas, you can’t just ban things. The collapse of fiat money would instead be seen as a vindication of Hayek’s analysis, and people like Dalio or the government itself would be seen as lunatics, living in a world proven to be wrong and fundamentally mistaken.
They’d have no voice to ban anything, even if they could technically ban it, which they can’t. The microphone instead would have long gone to others, with a slow gradual transition to be expected, rather than an instant shift, as monetary mismanagement contrasts more and more, and by the day, with the code based free market money.