The control of currency as a moral problem

Jeffrey Tucker, in lecture called ‘Capitalism Is About Love,’ recently said that Bitcoin “is the most exciting innovation of our time. It holds out the possibility of replacing the national currencies which have been a menace to civilization for six thousand years.”[1]

Is he right? I would like to use this as a peg on which to hang a discussion of the history of money.

The control of currency is a source of perpetual temptation. In the hands of princes and politicians it has been used again and again to sacrifice the common good for their own short-term gain. Above all, the control of currency has provided the financial foundation for war. It is true that the mechanism was not exactly the same then and now: in the middle ages princes profited from seignorage, the tax on the actual minting of coins; whereas modern politicians typically profit by devaluing the government’s debt. In both cases the princes use their control of the currency to write themselves massive cheques, draining away the wealth of their own subjects and enabling them to do terrible things.

If we want politicians to stop going to war, we ought to first of all take the currency out of their hands. This might accomplish more than all the anti-war protests and election campaigns in the world.

Who then do we want to control the currency?

If we want a stable currency then we can note that the cities of Florence and Venice, dominated by men involved in trade, kept their gold coins perfectly stable for centuries. But as these coins were used for international trade and were primarily valued for their precious metal content, devaluation would defeat their purpose. These polities were specially preoccupied with the import trade and so present a special case.

But it is by no means certain that a stable currency is what we want. A stable currency is not good for everyone all the time. Neither is devaluation an evil for everyone; peasant tenants rejoiced in devaluation and protested loudly when the currency was restored to its former strength.

The party who controls the currency has to adapt it to the situation of the moment. But in doing so, if he is to act for the common good and not simply his own profit, he needs to know what is the right value at any given time; or at least the right direction to go. How is this value to be known? A change, or indeed stability, will benefit some and hurt others. Whose interests are more important? How is this to be decided? And what about the long-term consequences, which must be considered as well: what will happen after the current moment, and how is it to be known whether the short- or the long-term is more important?

When faced in this way the problem becomes the same as for all schemes of central planning, whether dollar bills or bananas or babies. Even assuming the angelic virtue of the person in charge (which is by no means to be counted on), the epistemological problem is acute—how is the right value to be known? How many bananas make the right amount (and at what price)? How many babies make the right amount?

The decentralized or market alternative begins to seem attractive. Instead of some party in charge who can alter the currency by fiat, let the currency reflect the aggregate of many individual decisions. Call it an emergent order. The point is not that a decentralized or emergent order will result in perfect outcomes. The point is that it removes the moral problem of having the currency in one party’s hands; and it banishes the epistemological absurdity of thinking that anyone can know the right value of the thing.

John Munro said prices and population are twins; and there is a twin here with population policy. Does anyone have the requisite moral character, or the empirical knowledge, to decide on and implement a population policy? Suppose a Malthusian alternative: do we seriously want someone granted authority to decide whether we shall have more people or higher incomes? The wiser course seems to be to leave it to families to make responsible decisions for themselves, and what comes out is what we get. Of course the outcome will not be agreeable to everyone; but the alternative is intolerable.

Similarly with money. The history of money tells us the perils of individual authority. It would be better left the outcome of all individual decisions, taken on ordinary terms of responsibility, self interest, etc.

The medievals had this advantage over us: their money was based on a commodity with a worth independent of the prince. So the prince could reduce the precious metal content or change the face value of a coin, but he could not control the demand for, nor the price of, gold or silver. If a man had a pouch of gold coins, he possessed a store of value independent of the prince. No matter what the prince did at the mints, he could not take the value from your pouch of gold. And likewise though the prince could devalue the currency, he could not simply create more gold to fund whatever war he might want to afflict on the world.

Their disadvantage was that the availability of money as a means of exchange depended on the stock of these precious metals; and so if the kingdom was poor of silver then effective demand dried up, and commerce ground to a halt.

Our paper money has solved that problem, but we are worse off in that our money is not worth anything in itself. We are at the whim of our politicians and central bankers. They own the printing press (figuratively speaking). If they choose to print more, to pay for war or to buy votes or for whatever reason, they can do it; dissipating our savings like smoke and defrauding all their creditors.

Is there any solution? Bitcoin, or something like it, answers to both of the problems of currency of which the history of money tells. It is not controlled by any individual or organization. Even the creator of Bitcoin does not control it—he wrote the software and then set it loose. There is no mainframe that can be owned or gotten to; transactions are processed and records kept by independent computers across the whole world, which can always be run by anyone. More Bitcoins cannot be made, nor can they be destroyed. The value cannot be changed at whim, but is the outcome of the aggregate of all individual decisions ever made. And there can never be a shortage that kills effective demand, because bitcoins can be infinitely divided: even if 99% were hoarded and dead, the remaining 1% could be used by any number of people, because any fraction no matter how small can be electronically processed and recorded.

The single requirement is the infrastructure of the internet, the processing of digital transactions, and the keeping of digital records. That’s it.

Bitcoin could be the perfect currency. By taking currency out of government hands, it could rid the world of a menace which has afflicted mankind for millennia. In light of the history of money, we seem justified in saying that Bitcoin is indeed the most exciting innovation of our time.

---

[1] https://www.youtube.com/watch?v=XUDHZ5sYOZg

The Pope joins in the sport of insulting large Catholic families

Christoph Schmidt: Holy Father, first of all I would like to say: Thank you very much for all the impressive moments of this week. It is the first time I accompany you, and I would like to say thank you very much. My question: you have talked about the many children in the Philippines, about your joy because there are so many children, but according to some polls the majority of Filipinos think that the huge growth of Filipino population is one of the most important reasons for the enormous poverty in the country. A Filipino woman gives birth to an average of three children in her life, and the Catholic position concerning contraception seem to be one of the few question on which a big number of people in the Philippines do not agree with the Church. What do you think about that?

Pope Francis: I think the number of three children per family that you mentioned – it makes me suffer- I think it is the number experts say is important to keep the population going. Three per couple. When this decreases, the other extreme happens, like what is happening in Italy. I have heard, I do not know if it is true, that in 2024 there will be no money to pay pensioners because of the fall in population. Therefore, the key word, to give you an answer, and the one the Church uses all the time, and I do too, is responsible parenthood. How do we do this? With dialogue. Each person with his pastor seeks how to do carry out a responsible parenthood.

That example I mentioned shortly before about that woman who was expecting her eighth child and already had seven who were born with caesareans. That is a an irresponsibility. That woman might say ‘no, I trust in God.’ But, look, God gives you means to be responsible. Some think that — excuse the language — that in order to be good Catholics, we have to be like rabbits. No. Responsible parenthood. This is clear and that is why in the Church there are marriage groups, there are experts in this matter, there are pastors, one can search; and I know so many ways that are licit and that have helped this. You did well to ask me this.

Another curious thing in relation to this is that for the most poor people, a child is a treasure. It is true that you have to be prudent here too, but for them a child is a treasure. Some would say ‘God knows how to help me’ and perhaps some of them are not prudent, this is true. Responsible paternity, but let us also look at the generosity of that father and mother who see a treasure in every child.”

http://www.catholicnewsagency.com/news/full-text-of-popes-in-flight-interview-from-manila-to-rome-84716/

The rabbits comment was an evil thing to say. It lends ammunition to all the wrong people, the people who are eager (and sometimes already willing) to mock the very husbands and wives who are raising holy and beautiful Catholic families. We know a family, the ———s, who have eight kids under ten, and they are some of the most holy and joyful people we have ever met. They told us that people say to them sometimes, “Hasn’t anyone told you where babies come from?” (Their stock reply: “We know, and we’re experts at it.”)

That’s bad enough. But one day I a woman in our own Catholic parish asked me just that while they were in the room. I was so shocked that I did not reply in the forceful way that I ought to have done.

There are Catholics in our own Catholic parishes who are ready to insult large, beautiful Catholic families. And for the Pope himself to throw the word ‘rabbit’ out there is indefensible. On its own it is insulting and demoralizing, profoundly demoralizing. But worse, it opens up those families to be struck by more arrows and darts. Lord knows the Church is already a hostile environment, where every faithful and serious Catholic is likely to receive frequent wounds. The pope just picked up his slingshot and gave an example of how to shoot even more.

A good pope ought to defend Catholic families. Thanks to Jorge Bergoglio we are going to need stronger armour. Here is a shield and helmet that we can wear, given by Pope Pius XII:

Large families are the most splendid flower-beds in the garden of the Church; happiness flowers in them and sanctity ripens in favorable soil. Every family group, even the smallest, was meant by God to be an oasis of spiritual peace. But there is a tremendous difference: where the number of children is not much more than one, that serene intimacy that gives value to life has a touch of melancholy or of pallor about it; it does not last as long, it may be more uncertain, it is often clouded by secret fears and remorse.

With good reason, it has often been pointed out that large families have been in the forefront as the cradles of saints. We might cite, among others, the family of St. Louis, the King of France, made up of ten children, that of St. Catherine of Siena who came from a family of twenty-five, St. Robert Bellarmine from a family of twelve, and St. Pius X from a family of ten.

The Office's favourite sin: adultery

Despite the headline I want to make clear that I love The Office. The US version—the UK one is funny but too filthy and too full of horrible people. It is so coarse that it leaves you feeling dead inside. The US one continued the trend, already started towards the end of the UK series, of lightening up the tone and of making the characters more sympathetic. By the time Michael Scott left (season 7?) he was a thoroughly sympathetic character, meant to be liked and capable of being liked by the audience. Lightening up the show was a necessary move because it made it possible to endure nine seasons.

Anyway, the US Office is one of my very favourite television shows; second only, I think, to Freaks and Geeks. Nevertheless The Office is a highly Political Correct show. A few observations...

Undoubtedly the favourite sin of the creators of The Office is adultery. They harp on it from every possible angle with all different characters right through the series. Jim and Pam are the big one at the beginning, with Pam engaged to Roy but carrying on a highly inappropriate friendship and flirtation with Jim, leading to them falling in love and so on... They never sleep together while she is with Roy, which is good, but the whole romance is coloured by Pam’s engagement. Indeed the thrill of adultery is part of the intensity of their romance. Then Jim is with Karen and in love with Pam, etc.

And even after Jim and Pam get together, adultery gets suggested a few more times; for instance the gratuitous attempted-seduction of Jim by Cathy (during one of the worst episodes of season 8), and Pam’s strange relationship with the cameraman in season 9.

Erin and Pete: essentially a revival of the Jim and Pam plotline, Erin is dating Andy while falling in love with Pete. Like Jim and Pam they never commit formal adultery but again, the adulterous situation is part of the emotional grab. Here it starts to seem like adultery is just a cheap trick to make the romances more exciting.

But it is not just that. Consider the other characters and it becomes clear that the writers have a veritable obsession with adultery. They just cannot leave it alone.

Michael: while Michael and Jan are dating it is strongly implied that she cheats on him with her executive assistant, Hunter. Later Michael finds out that the women he is dating is married; he intends to go on dating and sleeping with her but eventually feels guilty and breaks it off. But not before meeting her husband and privately gloating about making him a cuckold.

Stanley: serially cheats on his wife, and his co-workers are fully aware of it after season 3 or 4. He shows no remorse for it and after the episode when it is revealed nobody troubles him about it. In season 8 and 9 it is revealed that he even cheats on his mistress, being essentially a compulsive adulterer—while in Florida (the same horrible episode as the Cathy situation) Stanley seduces multiple women and takes them back to his hotel room; he says to Jim at one point, when he thinks Jim is going to cheat on Pam with Cathy, “Careful Jim, it gets easier and easier.”

Phyllis: one episode has her worried that her husband Bob Vance will cheat on her with his secretary.

Angela: cheats on Andy with Dwight for a whole season, while lying to Dwight that she is not sleeping with Andy, finally breaking both their hearts. Then cheats on her Senator-husband again with Dwight. Then it turns out the Senator is cheating on her with Oscar. In the end it is revealed that her son (conceived during her engagement to the Senator) is Dwight’s child.

Oscar: has an affair with Angela’s husband the Senator. Then after the Senator reveals publicly that he is gay, he abandons both Oscar and Angela for another man he has apparently been having an affair with.

Darryl: has an adulterous flirtation with Val while she has a boyfriend. This is revealed when his text messages are read aloud, and the boyfriend accuses him of sleeping with Val. Darryl continually hits on her even while she goes on dating her boyfriend, even in front of him.

Ryan: dates Kelly through much of the series without any apparent intention of fidelity. When Erin arrives on the show he makes many passes, even straight out telling her that he wants to sleep with her even though he is with Kelly.

Kelly: in the later seasons when she has finally broken up with Ryan and is dating a physician named Ravi, she is constantly tempted to get back together with Ryan and actually makes out with him at one point. In the series finale she abandons Ravi and runs off with Ryan.

This covers all of the main characters! Watching the show, after awhile it becomes clear that the plot is very often driven by adultery, to the point that it seems like there is never a time when there is not an adulterous situation going on with one of the main characters. First it’s Pam and Roy, then Jim and Karen, then Andy and Angela (and also Stanley), then Ryan and Kelly, then Angela and the Senator, then Erin and Andy...

And it is very interesting how this played out morally. Actual physical infidelity, having sex with someone other than a spouse, is not exactly approved: when Michael finds out he is dating a married women they try to make him break it off, and in the end he does out of guilt. Stanley’s adultery is initially upsetting to his co-workers. But the rule is that adultery is not so serious as long as it is done by likable people. Hence the only affair that is really condemned is Angela’s cheating on Andy (and also, through dishonesty, cheating on Dwight). When that gets revealed it is treated as a serious matter and does visible harm to both men. But Stanley’s adultery is treated lightly and never criticized again after it first comes out; and the emotional adultery of Pam and Jim, Erin and Pete, though it has some consequences, is never really questioned. Even Oscar’s affair with the Senator, though it does show Oscar in a bad light, is relieved of guilt somewhat; and in a way Angela comes out of it looking worse, because of her hypocrisy—she is very angry at Oscar even though she already cheated on the Senator with Dwight—and because of how she reacts, hiring a hitman to whack Oscar.

What is the difference that makes Angela’s cheating on Andy the worst of all, and the others not so bad? Above all, why is Angela condemned but Stanley humoured? Stanley’s behaviour, by any reckoning, is much worse than Angela’s: he is married, and she is not (when she cheats on Andy); he has a daughter who must be harmed in many ways by his actions, while Angela does not; he is utterly self-righteous about it, while Angela at least shows some regret.

I think, sadly, the difference is just that Stanley is a likeable character and Angela is not. In fact the treatment of Angela as a character is one of the worst Politically Correct aspects of the show, worthy of another post.

The other difference, I think, is that the victim in Stanley’s case is offscreen, not one of the characters on the show, while the victim in Angela’s case is one of the main characters. And so we get the message: as long as we don’t know the person being injured, it’s not such a big deal... and that seems to be the way the characters treat it. With Andy they know him and see the consequences, so it’s important. But they aren’t friends with Stanley’s wife, so why worry? It’s his business...

Sadly, I have seen just this attitude among people I know. Adulterers are evil if they hurt your friends. But if a friend is dating a married man, well, it might not be ideal but I want her to be happy...