Bitcoin will spark an explosion in financial literacy, just as the printing press caused an explosion in reading literacy around 1400. While it is impossible to calculate the literacy rate before the invention of the movable type printing press, we know that the literacy rate is over 95% in many countries today.
I am confident that the same can happen to financial literacy because of Bitcoin. Best-selling author and educator Robert Kiyosaki is the first person I know to declare that most of us are “financially illiterate,” and he has been advocating financial literacy since his 1997 best-selling book, Rich Dad Poor Dad, was published . One of my favorite quotes about money and our banking system comes from Henry Ford, who said, “It’s good enough that people don’t understand our banking and monetary system because if they did, I think there would be a revolution before tomorrow morning give.”
After studying money, the US banking system and Bitcoin for the past few years, I have come to the startling and overwhelming conclusion that almost no one understands money, finance, currencies or our banking system, even though we are in the 21st system for two decades! This applies to finance captains, Kingpins on Wall Street, and almost every elected official. Almost every criticism of Bitcoin is based on ignorance about money, what it is or its purpose. Or that criticism is based on a deeply flawed understanding of our banking system. This ignorance extends to our understanding of digital scarcity, cryptography, Austrian economics, game theory, and comparing the old rails of the US banking system with the new rails of the Bitcoin protocol.
It is fair to say that I, too, did not fully understand money or the banking system until I started studying bitcoin. Bitcoin is like learning about a fourth or fifth dimension of money. Even the most experienced “experts” in money may know three dimensions of money today, but not a “fourth or fifth”. The three dimensions of money are time, space and scale or mass. Until Bitcoin was invented, there was no fourth or fifth dimension of money. While this is a topic for another article, keep in mind that until Bitcoin, there wasn’t any money with zero mass or weight that could be sent over the internet or kept in your head.
When you start doing your bitcoin homework, you need to review your assumptions about money. There is an old saying: “Fish are the last to discover water”. Well, the same goes for a financial person and money. Those in finance are the last to discover money precisely because they believe they understand, and they have been professionally trained by people who share the same blind spots about money and our banking system.
Let’s look at some common myths or assumptions about money that are tragically wrong:
“The Federal Reserve has constitutional authority to issue US dollars.”
Not correct. Our government documents do not give Congress the right to print money, let alone a private company wholly owned by a small group of banks. In fact, many of our founders were very negative about printing money and credit.
“The government has always spent our currency.”
This is completely wrong, but that doesn’t mean it won’t be widely spread, repeated, and believed. There was a time in the 19th century when banks issued their own banknotes. In other words, there was competition rather than monopoly money. This was also at a time when we rarely experienced booms and busts in our economy. See George A. Selgin’s 1998 book The Theory of Free Banking: Money Supply Under Competitive Note Issue. It was only since the Fed was founded in 1913 that we have seen booms, bankruptcies and rampant inflation in our economy.
“The Fed is a quasi-state entity.”
Wrong, it’s a private company owned by a small number of banks and not accountable to anyone. They make decisions in secret, behind closed doors and only tell you what they want to know. In addition, when they crank the press they get seigniorage, a hidden way of saying they get a percentage of every dollar printed! That fact alone should make you shudder.
“Money makes the world go round.”
In the age of unchecked money printing; Cash is rubbish. Every dollar that the Fed circulates (or worse, makes it available to the bank in the hopes that they will lend it) diminishes the value of the dollar in everyone’s pocket or bank account. And the small handful of banks get rich at the expense of the citizens. It is not unfair to say that the Fed is taking from the poor and giving to the rich. 1 / infinite = zero.
“The Fed’s inflation target of 2% benefits us.”
Not correct. Again, inflation is a hidden form of taxation or theft. Do not believe me? Since 1913, the US dollar has lost 98% of its purchasing power and is falling faster by the minute! And the smart money in the corporate world and on Wall Street says our government’s monetary response to COVID 19 in 2020 means the inflation rate is closer to 15-20%. A better name for inflation is “theft”.
“Deflation is bad.”
Wrong again. Deflation is an incredibly positive factor for our economy, although you will not admit it from anyone in government. See this article by Jeff Booth entitled “The Greatest Game.” Deflation means we all get more for less. Given the impact of technology on almost every industry, including money, we now have a computer in our hands that is capable of sending money around the world for almost free.
“The US banking system is based on free markets.”
That is also 100% wrong. The US dollar is monopoly money of the worst kind. The US banking system is fundamentally flawed because it is based on socialism. We allow private gains and social losses. See Robert Breedlove’s article “Masters and Slaves of Money”. The Fed does centralized planning and setting interest rates, and has done so since Alan Greenspan in the 1980s. We all learned very quickly in 2008 that the US banking system allows banks to “make private gains” and socializes losses. Hell, we now even have the most socialist policies of all as the prevailing narrative of our day, we now have banks that are “too big to fail”. Karl Marx would be proud.
The good news is that those willing to do their homework can level the playing field. No matter if poor, modest or otherwise disadvantaged, because everyone can understand money if they are open-minded and willing to learn. This means that people can gain an understanding of money that surpasses that of the billionaire class simply by doing their research. The best time to find out about money and Bitcoin was 10 years ago. The next best time is now. And don’t stop until you’ve invested 1000 hours.
This is a guest post by Mark Maraia. The opinions expressed are solely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.