Broken Money is Killing Us
We've stumbled into a way of living that is suboptimal. Our financial system makes us miserable and destitute. Understand what's driving it for better health and prosperity.
The industrial welfare-state has stretched and pushed humans to the edge of our capacity in the name of productivity and profit. It’ll kill most of us and potentially collapse our society if nothing changes. The proverbial make-work project has been dumped on civilization and there’s only a few ways left to opt-out.
We are cogs in a machine and it doesn’t matter if it was intentional or not, the system has forced us to live in such a way that maximizes wealth extraction at the detriment of our health and happiness. Push it further and too many of us will die of disease and despair to be productive, but just the right amount of angst and depression will keep our heads in the sand and the factories pumping out widgets.
We’ve been unintentionally programmed by society to work in such a fashion that isn’t sustainable for the majority of humans and that has also severely impacted our ability to produce prosperity and health for society. If we can observe these dark forces at work, we can find little areas of refuge and produce prosperity and health for ourselves.
The economic system of modern day society is based on a theory from John Maynard Keynes. Keynesian Economics (taught in all western schools).1 Which states that prosperity, production, and employment (societal growth), is derived from spending. That if we want to grow and prosper as a society we first need to get the economic engine running— we need to spend. Customers buy things signalling to producers to produce more and create new products or technology therefore increasing the overall wealth of society.
The downside to this theory is that we all must work and consume, non-stop. And if the powers that be deem we’re not consuming enough, too many people are unemployed, or economic trade and development isn’t happening to their liking— they fudge the system. The central bank creates new dollars, funds programs via debt (ostensibly to be paid back later), and incentivizes consumers to purchase goods and services in a variety of ways. We can pay the debt back later, eventually, but it means everyone needs to start working, producing, and consuming.
A ‘recession’, as the panicky news people on TV call it, is when the government notices that aggregate spending across the society is down. Which according to Keynes is bad. So we must print money and distribute it (arbitrarily) in order to increase spending and decrease unemployment. But everything in life comes in cycles, and in seasons. Not everything is up and to the right forever. Maybe it’s okay to take a pause, cycle back, or to ebb and flow.
But the printing machine is out of control. We’re in debt, running out of money, and the population feels squeezed and pressed like never before. The system is broken, but you can begin to remove yourself from it with new technologies like decentralized computing and cryptography.
Below is a graph showing Canada’s national debt and GDP (income). We are currently in debt 130% of our total income as a nation.
Every year Canada’s debt is at a new all-time high. From stimulus spending and bank bail-outs, and government funded mega projects; it doesn’t seem like it’s increasing our GDP. And it definitely doesn’t seem like it’s making life any easier or prosperous for us citizens. If your families debt was 130% of your income, would you change what you’re doing or keep doing the same thing?
Humans are tribal, we live in family groups. Anthropologist Robin Dunbar said that humans are at their most optimal when they live in groups of about 150. But look outside your window, we don’t live in groups. Society has programmed us to all want our own homes. Away from where we were born, away from our families, away from our friends, not near our tribe, and not close to where we work (a good commute is another way for all of us to consume just a little bit more).
How is it possible (seemingly overnight historically speaking) that all humans in modern societies wanted to live away from their families and in individual dwellings? Each one providing hundreds of thousands or millions of dollars into the system. Each one needing its own appliances, cars, swimming pools, maintenance, and a potpourri of unnecessary items and trinkets. We’re all rats in the experiment of Keynesian economics; extracting the absolute maximum of human consumption and production and spending as much as possible as fast as possible.
For what? In order to fuel economic development and prosperity in the long run— but Canadians are having a hard time putting food on the table, sending their kids to college, and affording a home. Maybe we need another hundred years for this theory to start working? Or maybe it’s just broken.
Most of us today pay hundreds of thousands of dollars including extreme amounts of interest for over 30 years to afford to live in homes that are identical to the next and hundreds of kilometres away from our families and friends. And what effect does this have? If we need to pay thousands of dollars a month, every month for decades to afford our home; we never leave, we never visit our family and friends, we don’t live our lives. We must stay at home, we must get ready for bed, because— we have work tomorrow.
Today, the average Canadian holds $500,000 of debt. After a quick online search I found mainstream media articles and news reports telling me how much debt is ‘normal’ for my age, and what types of things are considered ‘normal’ to use debt on, all while being bombarded with advertisements.
If we think about a society of 150 humans, I’d say the amount of debt that should be considered normal is zero. Maybe there’s some short term debt between merchants and consumers depending on supply and demand, but there’s no way a group of 150 humans would convince themselves that they all need to owe the society multiples of their yearly productivity— forever.
We don’t want ‘jobs’ and we don’t want semi-detached cookie cutter plastic houses for a million bucks. Humans need meaning.
In a 2018 book Bullshit Jobs: A Theory; author David Graeber estimated that 20-50% of jobs in developed economies could be considered bullshit jobs. One survey he cited found that 37% of British workers felt their jobs did not make a meaningful contribution to the world.
It’s hard to parse all that has contributed to the decline in mental health over the last 100 years, but what’s certain is that it’s in decline. And I believe the culture of work, productivity, and buy-and-spend-now-so-the-future-will-be-better economics is not working and is killing us. We invented the internet, but instead of making life more enjoyable and meaningful, we got working from home and one click shopping— go figure.
The American Psychological Association's 2021 Work and Well-being Survey found that 79% of employees had experienced work-related stress in the month before the survey.
The CDC reported that in June 2020, 40% of U.S. adults struggled with mental health or substance abuse.
A survey in the UK found that 37% of working adults said their job was not making a meaningful contribution to the world. Of those, 33% were more likely to report being unhappy, compared to 18% of those with meaningful jobs.
After World War II, most of the world met and agreed upon a US dollar reserve currency which would be backed by gold and redeemable anytime.2 This would create a system where a country would not be able to print money and inflate its currency without producing or acquiring the appropriate amount of gold. ($1 USD in circulation = $1 worth of gold in the reserves). But this didn’t last long, in 1971 the US reneged on this deal and began the fiat money system we have today. The Vietnam war was raging on and the gold standard got in the way of the money printing.3
Time and again when unemployment was high, productivity was low, or the country wanted to pay for something that was unpopular or couldn’t afford— it printed money. Increasing the supply and flow of money would create more consumption, forcing producers to produce more, thereby increasing the production capacity and economic output, and subsequently increasing the income (GDP) or overall wealth of the county. Or so the Keynesians thought— We’ll spend now, and reap the rewards later. We’ll be wealthy in the future, so we can rack up some debt now.
According to Keynesians inflation of the money supply is good, as long as we keep it around 2-3% a year (a number which is arbitrary and no school of economics can tell you how they get to it). The real answer for 2-3% inflation? It’s the highest number they can get away with without causing revolt among the citizens. Which allows them to pay for things that are wildly unpopular and the citizens wouldn’t vote for. (ie - war)
“[G]overnments believe that … when there is a choice between an unpopular tax and a very popular expenditure, there is a way out for them— the way towards inflation. This illustrates the problem of going away from the gold standard.”
— Ludwig von Mises
Money supply in Canada, 2-3% per year catches up. Siphoning our value away.
“Inflation erodes the purchasing power of money. Even with a low annual inflation rate of
2 per cent (the midpoint of the Bank of Canada’s 1 to 3 per cent target range for inflation since 1995), a dollar will lose half of its purchasing power in approximately 35 years.”
Bank of Canada
But look around, look outside. I’m not an economist but it doesn’t seem to be working— at all. From my grandparents generation to my children’s; we’ve gone through massive increases in productivity, science, engineering, and innovation. From wireless communications, commercial air travel, the internet, and artificial intelligence. But where the hell are all the rewards to society? We’re the poorest, least happy, and most cynical cohort since the Industrial Revolution.
We’ve created a never ending self-licking ice cream cone. Yes we’re more productive; people are working longer hours and for longer durations in their lives than ever before. But the Government spends billions of our tax dollars and burns the production capacity of our citizens every year, saving nothing. Not only does printing money and creating debt bankrupt our country, it devalues the money we already have saved in our bank accounts. Therefore stunting individual growth and prosperity.
This is not a rip on capitalism. Free markets do incentivize growth and productivity. This is a rip on central governments, central planning, and Keynesians controlling the money supply. This is a critique on centralization. Throughout history there are many examples of amazing human progress and freedom while government or authoritarianism was restrained or curtailed. The more decentralized you can make the system, the better. Spending, producing, and saving should be in the control of many hands (not a few) for the full market forces to take effect. There are other schools of thought that oppose Keynesian Economics.4
It’s practically impossible to fully escape this inflationary fiat money system we have stumbled our way into, for now. But there are a few ways we can safeguard some of our hard earned savings, with sound money. Gold and Bitcoin are sound money systems. They cannot be inflated to force more production and consuming. Creating your own business or working as a freelancer is another way to have some equity in something separate from the nation state. And of course finding your meaning and what type of life you want. Otherwise memetic desire and billion dollar marketing industries are going to tell you what you should want.
If people save and are more long-term focused, this is good. Optimal human potential (including growth) comes from a place of stability, abundance, saving, and long time preferences. Not; forced labour, overtime, spending, consuming, and short time preferences.
We all would do much better, individually and collectively, if we used a money that has long-term time preferences and doesn't incentivize us to spend now, and spend forever. And which isn’t controlled by someone who thinks they know best. We all know how good intentions don’t always lead to good places.
“cybermoney will be denationalized. When Sovereign Individuals can deal across borders in a real with no physical reality, they will no longer need to tolerate the long-rehearsed practice of governments degrading the value of their money through inflation … use of this new cybermoney will substantially free you from the power of the state.”
— The Sovereign Individual; James Dale Davidson & Lord Williams Rees-Mogg, 1997
User controlled encrypted algorithms that store your wealth and are impenetrable by governments aren’t science fiction, they exist today. Did you think they’d tell you about it?
Humans should not be chained to a treadmill of work and consumption:
Create value for others
Save your excess wealth in Bitcoin (or gold)
Have equity or stake in a business
Define meaning in your life on your terms
Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output and inflation. In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy.
The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was the gathering of 730 delegates from all 44 allied nations at the Mount Washington Hotel, in Bretton Woods, New Hampshire, United States, to regulate what would be the international monetary and financial order after the conclusion of World War II.
President Richard Nixon’s actions in 1971 to end dollar convertibility to gold and implement wage/price controls were intended to address the international dilemma of a looming gold run and the domestic problem of inflation. The new economic policy marked the beginning of the end of the Bretton Woods international monetary system and temporarily halted inflation.
The Austrian school is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivations and actions of individuals along with their self interest. Austrian-school theorists hold that economic theory should be exclusively derived from basic principles of human action.