I wrote on this topic before, and apparently I have to do it again, because reasons.

Whenever I think about why Bitcoin, or some other crypto-currency, isn’t and can’t be money, its advocates think I don’t understand crypto (going under assumption that it’s impossible to understand their position and still disagree with it, which is the essence of narcissism, but I digress), and I come out of it with an even more clear impression that they don’t understand money.

This isn’t really uncommon or strange, because I don’t think anyone educated under the Keynesian paradigm understands money, either, and this includes the heads of central banks worldwide. So, let me postulate a few things about money.

Money is a non-perishable, fungible physical commodity that is readily accepted in every trade, and continues to function as such regardless of circumstances.

According to this definition, neither Bitcoin nor any other crypto-currency meets the definition of money. They are non-perishable, they are fungible (meaning, you can divide it into smaller fractions, or unite smaller fractions into a larger unit, without loss of value), but they are not a commodity. They don’t exist outside of computers, and in fact they don’t exist or have any value outside the Internet, and a very complex superstructure of servers. It’s often mentioned, in favour of Bitcoin, that it has a reduced supply, but reduced supply doesn’t on its own make something meet the definition of money. Even the fact that it is accepted and used for payment at some places doesn’t make it money. My father accepted humanitarian aid as payment during the independence war in Croatia when people didn’t have money, but that doesn’t make pop tarts and potato chips money. They are perishable goods that can be accepted in barter in limited circumstances, the same as Bitcoin. You can use Pokemon cards in barter as well, but that doesn’t make them money.

However, according to the definition, US Dollar isn’t money either; it’s a state-enforced financial instrument. US Dollar used to meet the definition of money, when paper currency was merely a “pointer” to physical metal. The physical metal Dollar was money. It was a gold or silver alloy, that was readily acceptable in trade everywhere, derived value from its precious metal content, was non-perishable (meaning it would exist and retain its value thousands of years after the country that issued it was gone and forgotten, the way Roman or Austria-Hungary coins do now). Paper Dollar was initially pointer to money, and was accepted in trade under the assumption that it can be readily traded in for its nominal value in gold or silver.

If a country that issued it ceases to exist, money must retain its value and utility in trade. If electricity ceases to exist (in case of a Carrington event or a nuclear war), money must retain its value and utility in trade. If Internet stops working permanently, money must retain its value and utility in trade. The only way money can be allowed to lose its value and utility is an extinction level event that wipes mankind out.

It is perfectly fine if pointers to money are used in daily trade. That is actually preferable, and solves so many problems it was initially introduced as a solution to money transfers by the Templars during the crusades. A note that can be redeemed in gold is perfectly fine in most cases. A digital crypto-token that can be redeemed in gold is perfectly fine, in most cases, and elegantly solves the problem of international transfers and trade. “In loco London unallocated” exists as a form of clearing today, and is a first-order pointer to actual money.  But Dollar, Euro or other currencies are not. They are used due to a combination of habit, ignorance and a threat of force. What people actually think is that Dollars are backed by gold somewhere; it is not common knowledge that such backing was removed half a century ago, “temporarily, until things settle”.

Basically, if you want to see if something is money, imagine the state that issued it went down (like the Western Roman Empire, Byzantine empire, Third Reich, Kingdom of Yugoslavia, Socialist Yugoslavia, Imperial China and so on), imagine the 19^th century conditions – no electricity and no Internet – and see if you can buy a can of beans, a cow or a house with it, anywhere in the world. If you can’t, it’s not money – and don’t dismiss the described circumstances out of hand, because I lived for decades in the times without the Internet, and weeks in a row under power outages and occasionally under artillery shelling and air raids. If money stops working under those conditions, you are just asking to get fucked.

I live in Croatia. Here, I’ve seen money and paper currency from the Austria-Hungary empire, from the Kingdom of Yugoslavia, from NDH (fascist-collaborationist entity of WW2), Socialist Yugoslavia, and Croatia (Dinar and later Kuna). Basically, expected lifespan of a country here is from 20 to 50 years, and after it goes bust you can basically wipe your butt with its paper money. However, guess what? Gold and silver coins made in Austria-Hungary still trade on the market and you can exchange them for whichever currency. Gold and silver coins from the Kingdom of Yugoslavia are still worth their weight in gold or silver, plus the numismatic premium. If you manage to dig out a Byzantine solidus, you can sell it for its gold content plus the numismatic premium. However, if you by some chance have a paper that is “redeemable in gold by the central bank of the Kingdom of Yugoslavia”, it’s worth exactly its paper content.

The moment the Internet is wiped out, there is no more crypto, and if you count on crypto as money or store of value, you will be wiped out. The “issuing state” of Crypto is the Internet. As soon as the issuing state goes bust, all of its financial derivatives become instantly worthless. Anything that can fall back on its metal content, however, is perfectly fine, and all the denarii and solidi saved by your ancestors are perfectly good money today.

So, basically, the crypto advocates can dismiss my arguments, but when, not if, crypto and fiat currencies are wiped out, don’t expect me to feel for you. Anyone who speculates with crypto or other paper derivatives, and doesn’t have at least a third of their total net worth in precious metals is just asking to get fucked.

The deception about Bitcoin is that it is portrayed as a coin – usually a gold coin – and it isn’t a coin of any kind. It’s a piece of data. It exists only within the context of the Internet, computers and the power grid. Outside of that, it is absolutely worthless.

An Austro-Hungarian golden ducat also existed within the context of an Empire, but when this empire dissolved, everybody holding their wealth in ducats was perfectly fine, because its value was derived from what it is – the metal alloy and the mass – and not what it means. Wipe all the context from a gold coin and you have its weight in gold. Wipe all the context from a crypto or fiat currency and you have toilet paper, at best.

Yesterday morning, Božo and I were discussing what the gold price is going to do in the immediate future. While we both agreed that it’s going to drop, our rationales were different. He said that the American stock market crash is imminent, and when that happens, lots of large players are going to pull reserves out of gold and silver ETFs in order to cover their margin calls. While I don’t dispute that, I sent him a very visual analysis of my thinking:

Basically, since June we had two events where someone dumped billions of dollars in gold futures and other paper assets onto the market in the deep black of the night, and intentionally triggered “stop loss” scripts across the market, creating an avalanche of selling which crushed the price, and since the price of paper and metal are united, this “someone” then bought billions of dollars worth of either very physical gold, or swapped short for long positions. Since the amounts are enormous, only huge banks are able to perform such blatant market manipulations for their clients, of course earning a percentage in the process.

What my annotated graph says is basically “there were two such large gold purchases in the recent past, and it looks like there’s going to be another imminently, probably during the weekend, like the last time”. Sure enough, within a few hours gold started dropping like a rock, and here’s what the graph looks now:

And then I hear the “experts” talking about how this or that “indicator” caused the gold to drop, like, people think the economy is better than expected or the inflation is not as bad as projected, and I think, you people are educated way beyond your intelligence, because the actual free market influences are obviously suppressed to the point where they don’t even register. It’s a game played by the big market manipulators and computer software doing the actual trading, and the only question is when the system will go beyond limits of its endurance and collapse entirely.

The thing that’s actually going on is that very big players apparently caught up to where I was two years ago and are now unwinding their other assets and going hugely into gold. Basically, the entire market is a pump-and-dump scam, and those who pumped and dumped are moving their profit into metal, because that’s the only thing that can survive the kind of crash that I see ahead.

Palantir (NYSE: PLTR), which is a CIA spinoff for all intents and purposes, bought $50 million of gold in 100oz bars, and apparently everybody is having kittens over it, as if they’d never heard of the shiny yellow thingy. Why would anyone think the shiny thingy is money? Wojak scratch head.

That happened at the time when everybody and their dog are bullying me online with ads for bitcoin and other crypto garbage, because we’re in some pump-and-dump scheme where they are trying to get rid of it, hopefully for more than they paid for it, because the game for crypto seems to be over. China closed the mines so there’s hardly any new bitcoin being made, so the only ones being on sale belong to the folks who are paying for the ads. Think about it: if someone actually thinks it’s going to be worth more, they sure aren’t going to sell it, let alone advertise it. If they are selling it, it means they are looking for a fool bigger than themselves, which means all my enemies are certain to buy it.

Also, someone has recently done a very LARGE short-to-long swap in gold, by dumping over $4 billion of gold futures during the night, triggering sell scripts everywhere and dropping the prices significantly, and then someone picked a huge long position in gold at a discount. Gold recovered in the meantime, and silver and platinum are still being hammered. I’m buying all three at the maximum rate my income allows.

I’ve seen reports of rising prices and reduced availability of all sorts of items, and the interpretation I’ve been hearing is that it’s due to inflation caused by rampant money printing.

I don’t agree with this assessment, because in order to have inflation, you would need to have printed money distributed as salaries or stimulus, to which the sellers would react by raising the prices to compensate for the dilution of the value of money. So far, I’ve actually seen inflation but it’s been contained to the very select few asset categories, because the banking system is designed to prevent people who actually need money to get it, because they are deemed “high risk”, and the entire banking system is designed around the various safeguards that essentially guarantee that all the cheap credit will be available only to the select few “blue chip” players, and they are the ones who are swimming in all this low-interest credit, supposedly created to boost the economy. What this means is that the necessary prerequisite of inflation – the increased volume and speed of circulation of money across the entire populace – does not exist. And yet, we do indeed have the opportunity to witness the increased retail prices and reduced availability of an increasing number of items. So, what’s going on?

I think what’s going on is actually worse than inflation – we’re seeing the collapse of the entire economic system, we’re seeing it contract into a black hole. The governments kept imposing various anti-capitalist rules, with all kinds of excuses – whether it’s sanctions, or fighting carbon, or fighting covid, but what they managed to do is disrupt the routine of supply and demand to the point where production became more expensive, transport became more expensive, and we now have spikes in demand that result in higher orders from the manufacturers, which raises the prices because the production just isn’t scaled for such spikes, and then those spikes clog up the transport lines, creating random and chaotic delays across the board, which then in turn creates shortages due to time delay between order and delivery, which in turn raises the retail prices. Also, there are serious labour issues due to lockdowns, among other things.

So, the entire supply-demand that usually follows predictable principles is now aggravated by the length of the global supply lines and the resulting delays, and the entire thing is magnified by the fact that all kinds of communists in power are competing with each other in introducing more anty-capitalist, anti-energy, anti-efficiency laws, and the entire machine might actually grind to a halt, to their great pleasure, and our great misfortune. Basically, capitalism normally reacts to high demand by immediately delivering high supply of goods and services, which keeps the prices either constant or lower, and now the machine is disrupted to the point where it just can’t deliver, so the obvious thing in case of reduced supply is to raise the prices. Also, the cost of staying in business in the lockdown era has increased, and the businesses can either raise the prices or close.

So, as much new money gets printed, the only places that manifest inflation are the stock market and the real estate market, because that’s where the ones with access to all that credit get to spend it, which creates huge but localized bubbles. But if we’re talking about the prices of the retail goods and services, they have nothing to do with inflation; yet, becuse the governments will eventually find a way to pour money into the pockets of consumers in order to “stimulate” consumption, and then inflation will explode in the retail market as well.

What we are seeing is a result of a socialist conspiracy to sabotage capitalism.