Terms of Service (TOS) Is the Crypto World’s Perversion of Sound Money
The dollar was once defined as a fixed weight of gold. Banknotes were redeemable in gold. This was the TOS (Terms of Service).
Money is the most tradable good measured by a standard.
As Aaron Septuliva-Cue teaches, “Money is not the most valuable good. Money is the most tradable good.” Nor is money the most stable good.
By far the most tradable good worldwide remains the U.S. Dollar. Therefore, the most tradable cryptocurrencies are the misnamed stablecoins tied to the U.S. Dollar. [Misnamed stable because the U.S. dollar is not stable (like gold) and has no fixed supply (like bitcoin) but is inflated at the whims of the issuers.]
This axiom is true whether the underlying standard is sound or unsound.
Competing Standards Are The Foundation for Sound Money Without Regulation
Now, I am not talking about money here. I am talking about Standards—a measuring tool—a yardstick for those in the New World or a meterstick for those in the Old World.
A yardstick is defined as 36 inches. A meterstick is defined as 100 centimeters. The definitions are the same yesterday, today, and tomorrow enforceable by law.
In the same way, an ounce of gold is an ounce of gold yesterday, today, and tomorrow. And a bitcoin is a bitcoin yesterday, today, and tomorrow. Both are the foundation for sound money and banking.
Two years from now a meterstick is not defined as 80 centimeters. An ounce of gold is not defined as 0.8 ounces of gold or one bitcoin as 0.8 bitcoin. To do such a thing is a scam. It is a fraud, but to use the word fraud opens the writer to expensive libel litigation. So scam is the modern buzzword for fraud.
And this scam is exactly what happened when FDR confiscated gold and devalued the dollar. While an ounce of gold was still an ounce of gold, gold was confiscated and the dollar devalued. The 1934 Gold Reserve Act changed the statutory gold content of the U.S. Dollar from $20.67 to $35 an ounce.
Money is not the standard. Money is the most tradable good measured by the standard. Under the gold standard that emerged organically in the market leading to the Gilded Age, banks issued specie or banknotes, representing new goods coming into the market based on the gold standard measuring stick.
Banks are not a gold warehouse. Gold warehouses are a 100% gold reserve standard advocated by gold socialist Murry Rothbard in The Case For a 100% Gold Dollar who advocates such a system be imposed by law.
Interestingly, 100% reserve socialists, whether in gold or bitcoin, are often closely aligned with Keysians and Bitcoin Crony Capitalists, advocating regulation such as reserve requirements to achieve their ends and impose their monetary policies. They hate being called Crony Capitalists, gold socialists, or Bitcoin socialists, but ad hominem arguments are valid if they are both true and relevant.
This does not mean that bitcoin or gold cannot be used as money. They can. However, neither physical gold nor digital Bitcoin works well as money. In the United States, the dollar is the most tradable good. In the Crypto World, the dollar stablecoins are the most tradable goods.
While the Gold and Bitcoin standards do not change, just as a meterstick does not change, the most useful money based on these standards can and does change constantly.
Sound commercial banking emerged organically during the Gilded Age with the creation of the most tradable good measured in the gold standard. This was not physical gold but banknotes issued by banks redeemable in physical gold. The banknotes were backed by goods offered into the market, including gold. Again, gold circulated very little as money. Rather banknotes circulated as money because they were the most tradable good, trading at a premium or discount based on the perceived soundness of the bank issuing the banknotes, much like stablecoins trade today.
The Lost Art Of Commercial Banking by E. C. Harwood.
The banknotes were redeemable in gold. The dollar was defined as a fixed weight of gold. This was the TOS (Terms of Service).
No regulations, and no minimum reserve requirements, were required for sound money to evolve in the market. The expansion and contraction of the money supply was determined by market forces alone.
Relearning The Lost Art of Commercial Banking
The Crypto World is on the cutting edge of the new emergence of sound private free market money and banking, yet even the very best minds are trapped in the age of their thinking and doing.
Terms of Service (TOS) routinely use language like, “We have the right to amend the Fees at any time at our sole and absolute discretion without prior Notice to you. The amended Fees will apply to your use of the relevant Services or Products following the effective date.”
Lessons taught and well-understood by the best minds in the sound money movement have yet to be learned and put into practice. A genuine utility coin requires making and honoring commitments.
UGLY OLD GOAT
