Unit 9 Lecture Notes

So, how can Bitcoin help the poor?

There is nothing secret, complicated, or elusive about economic growth. It is a very simple process that happens when people accumulate capital, trade, and adopt new innovations. These are the three drivers of economic growth in any time and place, and today's poor countries are no different. They have had little capital accumulation in the past, little to no integration into sophisticated global markets, and cannot innovate or adopt the innovations of others.

The correct question, then, is not 'How can poor countries grow?', but rather, 'What is stopping these countries from accumulating capital, integrating into world markets, and utilizing advanced technologies?'

The answers are as obvious as they are impossible to ever find in the thousands of development agencies' unreadable reports published yearly. Capital accumulation is punished severely through inflationary government policy and control over the banking system. Government debt, prompted by the all-powerful International Financial Institutions, shackles the population with debt that lasts generations and requires endless taxes to repay, reducing their ability to accumulate savings from their in come. When these debts are used to finance government central planning, the majority of the population's productive capital is put in the hands of central planners. Meanwhile, government control of the balance of payment accounts scares away a lot of potential foreign investment, free trade, and techno logical imports. On a national level, the division of labor and the natural workings of a market economy are sabotaged through the central planning that IFI's impose on developing countries, which destroys the price mechanism and leads to misallocated resources. On a global level, free trade is hampered by Mercantilist bureaucratic parasites who don't see how critical it is for people's lives, and only deem it a threat to the international cash balance that allows them to continue extracting seigniorage. To cap it all off, IFI's and puppet-master foreign governments impose trade restrictions and prevent technological transfer under the name of "free trade agreements" and patent protection.

The three International Financial Institutions are inherently set up to destroy the only three mechanisms for economic growth and prosperity. The World Bank's central planning destroys the division of labor, the IMF's monetary stipulations destroy the chance of having sound and hard money and thus accumulated capital, and the WTO prevents technological advancement of poor countries through patents.

Bitcoin's promise is to undo the twentieth century's uninvention of a global money. Bitcoin could then save the world's poor from those who have been relentlessly and catastrophically "saving them" for decades. There was no World Bank, IMF, Unit ed Nations, or World Trade Organization under the gold standard, and that is likely to be the case in a bitcoin standard.

Without governments' national currencies, protectionist policies, and capital controls, the movement of talent, technology, and capital around the world would be far more free. Had the IMF never existed as an enabler of the worst inflationist impulses of the world's governments, one can only imagine what sort of prosperous world we would live in today.

Important to keep this in mind in light of last month's bulletin and possible bitcoin failure scenarios. This is what Bitcoin is up against, and as long as this system continues to be as dysfunctional as it is, demand for bitcoin around the world will continue to rise.

Will there be corrupt governments under hard money? Of course, but they will face the consequences of their corruption far faster, as they run out of money and can no longer afford to pay the henchmen that prop them up. This global system will not be ended by the people who benefit from it, and they will not want to reform it. They are a bureaucracy whose raison d'etre is perpetuating its raison d'etre.

Not about credit card access or lower transaction fees. We have far larger fish to fry.

Poverty cannot be ended in absolute terms any more than ill-health can be ended, because it is a consequence of individual actions (both chosen and sometimes unchosen) that cannot be stopped. Humans who choose to spend more than they regularly earn will eventually be left destitute, just like how those who consume junk food will be left unhealthy. Bitcoin cannot end poverty, of course, and it cannot save those who cannot save themselves. But what it does offer is far more valuable than anything the misery industry can: economic freedom. A world financial system built around bitcoin would replace International Financial Institutions with the normal workings of the free market. There can be no global lender of last resort in that world, and there can be no global bureaucracy to centrally-plan the world's economies or restrict its ability to trade with the rest of the world.