Intro to Stables and Democracy
If Web3 fails so will the democracy it seeks to fix, Gavin Wood
Stablecoins are not a new idea, neither is decentralized money, but both represent the only legitimate alternative to an existing money system that needs fixing. A strong economy is what makes democracy a powerful force for good in the world, but if it is to preserve a strong economy it needs a strong currency. Satoshi Nakamoto understood the world needed a better money system & there is a growing army of Web3 projects behind his ideas armed with the brightest minds MIT, Cambridge, & Stanford can provide. Anyone paying attention knows every beginning has an ending, but the missing link is not in blockchain inspired code, it is in history that informs that code, & winning the small battles that make victory possible.
The fall of decentralized money
In the mid-1800’s between the end of Andrew Jackson’s presidency to the American Civil War, the United States allowed banks, states, and private companies to print their own currency without much oversight. This was not considered a risk to the financial stability of the country, because from the very beginning of the United States, its’ founding founders had distanced themselves from the idea of central banking – though there were failed attempts at it.
During the Civil War, Congress pushed for banking laws to finance the war and established the first national currency under the National Bank Act of 1863. Prior to this act, states issued bank charters and state banks issued their own currency. It was common practice to cross state lines and exchange currency or its’ gold/silver equivalent to do business. After the Civil War, these powers did not fall directly to Washington DC, they fell indirectly to nationally chartered banks under the supervision of the US Treasury Department. Eventually the National Bank Act set a precedent for the establishment of the Federal Reserve Act (a pure private entity) in 1913, under the assumption that the peg would remain gold. As we know 100+ years on, that was a flawed assumption.
A century of clock & dagger
The Federal Reserve opened its’ doors in November 1914, four months after the beginning of World War I. This is a theme that has repeated itself throughout history, because wars are expensive and the money to fight them is often not immediately available. So, in order for governments to finance them, the system needs to change. For example, during World War I all the major European powers abandoned their gold standards. During the Franco-Prissian War in 1871 Germany declared that it would no longer mint silver coins, the United States followed in 1873. The result was a silver crash, which led to real estate & bank failures ushering in the longest depression in modern history lasting over 20 years in some countries.
World War II left large portions of the world destitute & with the USA holding most of its’ gold & industrial output, the world had no choice but to hand proxy power to a USD pegged to gold. That was also an illusion long before it came to be. After the US outlawed private gold ownership in 1933, the federal government created a monopoly on the sale & distribution of gold in the US for almost 40 years. Executive order 6102 was only repelled 3 years after the US came off the gold standard completely in 1971.
The USD peg died because wars are expensive. The Cold War with Russia, the hot proxy wars with Russia/China in Korea & Vietnam, the 20 year wars in Iraq & Afghanistan, the new hot proxy war in Ukraine, & the ongoing cold ones in Taiwan & Korea. Eisenhower’s Military Industrial Complex handed the baton to Silicon Valley, bec big tech is the tip of the spear for the economy and the military. The history of US military tech reads like the Book of Genesis. Lend-lease bought Churchill & Turing time at Blenchry Park, DARPA beget the Internet, which beget Web1, which beget the mega Web2 monopolies we have today. Web2 sets alight to everything though because it provides the USD based economy a shield, its’ military power provides a sword. Together they front a financial system unmatched in terms of raw power & reach; but as Fernando Pessoa put it “strength without agility is a mere mass”.
Stables and Democracy
Stablecoins represent a technology that moves money at the speed of email. They are in a sense the bridge between Satoshi’s strong money ethos and the fiat reality we use to survive. The Feds ability to print un-pegged dollars and still have the USD dominate global commerce for over 75 years is a strong indicator of the US’ raw financial/military power and its’ ability to mask the systemic problems that support it.
Alexis de Tocqueville wrote “America is great because she is good”. If he were alive today he may very well have wrote “America is poor because her money is an inflationary mess”. Yet, for every problem there is a solution, and we need to fix this problem now, because America for all its’ many flaws is the only democracy with the power to stop powerful dictatorships that will wage war where they see weakness. The demons of Stalin and Mao possess the leadership of Russia and China today and their fixation with conquest is as much of a threat to humanity now as it was in the last century.
If democracy is to survive its’ technology must evolve & embrace Web3
George Washington’s right hand – Marquis de Lafayette once wrote “Humanity has won its’ battle. Liberty now has a country”. Today, liberty is under siege on many fronts. If you love democracy you must embrace both the pros and the cons, so you can fix it.
Stablecoins are not the end, but they are the end of the beginning. They are the bridge between here and tomorrow. They are the beginning of a strong money system that Satoshi sought.