This is an opinion editorial by Andrew Axelrod, a Bitcoin educator and contributor to Bitcoin Magazine
Much like the tragic figures of Greek mythology, China has a long and storied history of wrenching defeat from the jaws of victory. Its ruling class, in particular, has always had an insatiable appetite for self-flagellation. The bitcoin ban is just the latest chapter in this sad and destructive story.
Blessed with an abundance of natural resources, a massive population, and full access to the South and East China Seas along its 9,000-mile coastline, China was perfectly designed to be everyone’s empire. ages.
And for nearly 2,000 years it dominated the region.
Long before the English and the Spaniards, China built entire fleets of treasure ships capable of traversing the farthest corners of the earth – capable of even reaching the New World, centuries before Christopher Columbus set sail. .
If things had been different, America might well have been subject to the emperor instead of the king, and Mandarin would be the predominant language of the world, not English.
But that was not allowed.
Driven by jealousy, fear and resentment against their own nascent and prosperous merchant class, the ruling elite – aka the central planners – ordered all ships to be burned. An act of pure self-immolation as it turns out.
This left the Chinese people stranded, unable to explore the outside world, and left them isolated and vulnerable to the horrors of the Opium Wars that colonial Britain brought to its shores.
The next cabal of central planners to sow chaos and destruction were the communists under the master planner himself, Chairman Mao. And again, the target of their anger was a rising middle class. This time, the productive farmers of the Chinese countryside were the sacrificial lambs for slaughter.
The Red Guards, Mao’s cadre of fanatical supporters, marched all over China, zealously purging the so-called “Black Five Categories”. These included: wealthy farmers, landowners, counter-revolutionaries, right-wingers and heretics of all kinds.
With society uprooted, millions of peasants were then collectivized and forced into labor camps to produce crops. Of course, famine soon followed and millions perished. The unauthorized possession of a single grain of rice was sufficient justification for the execution of entire families.
This living nightmare was never completely digested.
In fact, with the advent of the Internet, central planners were back. Paranoid for fear that their power will be challenged, a digital firewall has been erected. Much like the Great Wall of China centuries ago, this wall was meant to keep its people captive, docile, and safe from potentially corrupt outside influence. Unwanted speech is censored and past crimes cannot be discussed.
Otherwise, how could a society bow down before the altar of a genocidal maniac, the exterminator of its ancestors? To this day, Mao is revered as a god. And so, the fading memory of these atrocities and even of the estimated 50 to 100 million dead1 were not enough to put an end to the vicious circle.
No, the central planners were just getting started.
That’s right, the Chinese butchers were preparing for their next amputation.
Perhaps the most devastating, self-harming and masochistic decision of all was the one-child policy. Here’s the sickening recipe: order women to stop having children (for the common good, of course) and decimate the population by several hundred million more. By 2050, China’s population is expected to be halved.
Then, to add humiliation to injury, print money to artificially depress the country’s currency, make production cheaper, and enslave the population as factory workers in order to stimulate economic activity and compensate for the demographic slowdown.
Excess cash is then (as always) misallocated and flows into useless real estate projects. Often houses, apartments and buildings are not even bought to live in. They are bought as stores of value – a place to seek shelter from the rapidly increasing money supply. This is how the “ghost towns” of China were born; ruined and decaying monuments to millions of unborn and aborted people.
And so, between demographic collapse, the bursting of a housing bubble and a zero-COVID lockdown policy (another humdinger of central planners), China finds itself on the brink of a potentially crippling financial crisis.
So the money printers have to run even hotter, stealing what little productivity remains from people beneath them and causing increasingly devastating calamities by inflating bubbles throughout the economy.
So every fatal mistake along the twisting and winding path, a consequence of the nihilistic and ultimately deadly belief in central planning.
And this is where this path leads to: the banning of bitcoin – a pure outgrowth of the free internet and the rejection of centralized power, an essential tool in the fight against the coercion of fiat.
The central planners of course deny this. When cornered at this summer’s WEF event, Premier Li Keqiang made some noise about the possible easing of lockdowns, but spoke out vehemently against stimulus injections and inflation:
“We will not resort to very large stimulus or excessive money printing to achieve a high growth target. This will impinge on the future.
This promise is not only empty, it is actually a blatant and obvious lie for the following four reasons:
1. Money printing is not optional in a fiat system.
Over the past 20 years, China’s M2 money supply has swelled by an average of 14% per year. This means that the money supply has doubled every 5 years! With a total debt-to-GDP ratio of over 300%, the compounding of interest begs more and more print. This is how a debt-based fiat system works.
Money circulates in the economy by issuing debt. Servicing interest on this debt is only possible through, you guessed it: more money printing, aka debt creation.
Rinse, wash, repeat. It is the serpent biting its own tail.
And structurally, there’s no way to reverse or even temper that. The system is built on a one-way track where it is inflated or devastated. Not that the central planners really care about the devastation, except…
2. …The stopping of the printer causes a revolution.
This goes double for a centralized power structure that relies heavily on coercion through the printing of money to bend the population to its will. It is no coincidence that paper money was first developed by central planners in China.
The recent liquidity crunch has already led to bank runs and even protests, which are extremely rare in China. But don’t worry, the military tanks reacted quickly, ready to drown out any signs of insubordination in the echoes of Tiananmen Square.
Worse still for central planners, a record number of homebuyers are turning down mortgage payments in more than a hundred cities. The contagion began with Evergrande last year when it defaulted on much of its $300 billion debt mountain. The real estate sector, which represents 30% of economic production, is today threatened.
When things go wrong on this scale, social unrest is never far behind. The CCP knows this and has asked the banks to bail out struggling real estate developers, that is, to print more money.
3. The Chinese economy depends on exports.
Money printing is notoriously a race to the bottom. Whoever devalues the currency fastest has a competitive advantage. This is because domestic goods are becoming relatively cheaper in international markets. China has made good use of this, constantly pushing the yuan lower in order to boost its exports.
But why not just switch to a consumption-based economy and let the yuan strengthen? As we have seen, China’s recently abandoned one-child policy is expected to halve the population over the next thirty years. There will not be enough population left to sustain this type of transition. Moreover, a consumption-based economy means letting people choose what they want. Something central planners cannot begin to understand.
4. They already banned bitcoin.
And finally, if printing money is really not on the table, why close the emergency exits? China is one of the only countries to maintain a complete ban on bitcoin, including ownership, and has some of the strictest currency controls to prevent capital flight.
Instead of bitcoin, China’s central planners are of course doubling the digital renminbi, giving them almost unlimited control over the population and tightening the noose even further.
Does this sound like printing money isn’t in the cards? (Rhetorical question).
Central planners are therefore, as always, busy locking doors, battening down hatches, and closing all possible escape routes.
Bitcoin, as the ultimate tool of self-determination, cannot be tolerated.
Much like the Great Wall, the digital firewall, or the burning of treasure ships, central planners must isolate their victims and cut them off from any hope of salvation.
Then they can do whatever they want with them, undisturbed.
The (central) plan is incineration by inflation. Because when things go wrong, print some more!
Endnotes
1. The fact that the death toll is unknown reflects the utter horror and utter chaos of the times.
This is a guest post by Andrew Axelrod. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.