“ATH! ATH! ATH! ATH!” — Every bitcoiner in the world right now
Bitcoin’s having a good week — if you consider a several trillion dollars in future losses for the middle class a good thing.
All-time highs certainly make the Bitcoin cult high, alright.
Right now, Twitter is a-flutter with bitboys in rapturous ecstasy, declaring total economic victory — as if the ballooning price of a Ponzi scheme somehow confers legitimacy — spouting fake words and phrases like “supercycle,” “hypercycle,” “parabolic,” and “the exponential age.”
It’s all hogwash.
While I’m just as happy as the next guy to see the $USD, $CAD, and £GBP crash and burn and die forever, just because $BTC is experiencing a pump doesn’t mean it won’t end terribly for thousands of young speculators.
Bitcoin will almost certainly never be the global reserve currency, and there are some intriguing historic precedents worth considering before an entire generation gambles away their life savings on a bunch of digital files.
Let’s go visit ancient Greece and Rome.
The year is 432 BC.
The entitled and decadent city-state of Athens is on the rise.
The violent and brutal city-state of Sparta is in decline.
The Athenian military general Thucydides sizes up the situation and realizes something inevitable is about to occur:
And a bloody war at that.
For more than a generation, the two city-states went at it with all the cruelty and brutality they could muster. Huge amounts of the countryside were destroyed, entire cities leveled, whole cultures made extinct, with tens of thousands killed by sword and spear and starvation and plague and fire.
When it was all over thirty years later, Thucydides penned his official history of the bloodbath, entitled The History of the Peloponnesian War, and concluded:
“It was the rise of Athens, and the fear that this inspired in Sparta, that made war inevitable.”
The year is 279 BC.
Pyrrhus, king of Epirus and one of the greatest generals of his era, refuses to accept Roman rule in his part of Greece.
At the battles of Heraclea in 280 BC and the battle of Asculum in 279 BC, Pyrrhus and his army defeated the Romans… but suffered irreplaceable casualties in doing so.
As Plutarch reports in the Life of Pyrrhus:
The armies separated; and, it is said, Pyrrhus replied to one that gave him joy of his victory that “If we are victorious in one more battle with the Romans, we shall be utterly ruined.” This was because he lost a great part of the forces he had brought to Italy, and almost all his particular friends and most of his principal commanders. He could not call up more men from home and his allies in Italy were becoming indifferent. On the other hand, as from a fountain continually flowing out of the city, the Roman camp was quickly and plentifully filled up with fresh men, not at all abating in courage for the loss they sustained, but even from their very anger gaining new force and resolution to go on with the war.
So, too, was the case with Athens and Sparta 150 years earlier.
In the end, Sparta won — nominally — but when their three-decade war was over, both nations lay in ruin; economies shattered, a generation of young boys dead, their cities undefended, leaving all of Greece vulnerable to invasion from the east.
Decentralization vs centralization
This will be the economic battle of our time.
Bitcoin and its mob are the rising Athens — decadent and demanding; brilliant, yet entitled.
Government fiat is the bitter, savage, violent, and ancient Sparta; the ugly, backward, and corrupted status quo.
Perhaps the greatest and most baffling cognitive dissonance amount bitcoiners right now is how, on one hand, they hate “fedcoins” and insist the whole Federal Reserve system is a corrupt institution run by lying criminals (which it is), and yet when it comes to the matter of whether or not the Fed will eventually try to kill Bitcoin and launch its own digital surveillance currency, they’re the first group to defend the Fed and say it will never happen because people at the Fed have promised they won’t shut Bitcoin down.
Do they have a split personality?
Just go on Twitter. Bitboys absolutely rail against the Fed, but also insist that the Fed’s going to do the “right thing,” stick to their word, and roll over for Bitcoin.
Even Tim Denning (who, to be clear, is not an outrageous bitcoiner) has drunk the Kool-aid, saying:
Does anyone really believe this policy decision will hold forever?
That the nation with the biggest military in human history is simply going to give up its ability to control and manipulate the global economy just because some genius coder created an accountable and unmanipulatable digital currency?
There’s simply too much wealth to be extracted by controlling money.
War between Athens and Sparta is inevitable.
Here’s what’s likely going to happen
America will continue to let Bitcoin chug along until it becomes an actual and major threat to the real American economy.
Which it most certainly will do. As more nations pull an El Salvador and ditch the US Dollar, as more people start evading taxes because it’s so easy to do with Bitcoin, and as tens of millions ditch the USD because it’s so inflationary, there will come a mathematical breaking point when it’s in the best interests of the American state to launch its counter-attack.
America will launch a digital surveillance currency.
Just another fiat currency, but this time, it’s a fully traceable, trackable, deletable, weaponizable panopticoin.
America will make Bitcoin illegal.
Would you buy, hold, spend, or accept Bitcoin if getting caught in possession of it came with a ten-year jail sentence or a $250,000 fine? Most people wouldn’t. And most vendors certainly wouldn’t accept Bitcoin for transactions, which will essentially end the long-term domestic market for Bitcoin.
America and Bitcoiners will go to war.
The likes of Michael Saylor and Robert Breedlove will move to Bitcoin-friendly nations and invest accordingly, and many location-independent folks will follow, but all will face sanctions and seizures of domestic assets. America will then enlist its allies to join in a federation that bans Bitcoin — after all, each of these nations will also be suffering from cratered tax revenues thanks to Bitcoin — making geoarbitrage increasingly difficult even for highly-mobile Bitcoiners.
America will eventually win.
But only in the same way that Sparta beat Athens. Bitcoin will still exist, of course, though likely only as a currency in marginal nations like El Salvador. America, too, will still exist, but the battle for monetary supremacy will have taken its Pyrrhic toll on the economy, leaving America and the rest of Western civilization vulnerable to economic subjugation from the east.
China sweeps in like the Romans and Persians.
When weakened decentralized powers break down, all it takes is one somewhat-strong centralized power to sweep in. In the case of the city-states of Athens and Sparta (and Thebes and Corinth and hundreds of others), it was Alexander who put all of Greece under his rule and reign.
The Chinese Dream, as laid out in Xi Jinping’s book, is simple: To make China the center of the economic universe. A single, united Han bloodline, rich in resources and mighty in power and strength, essentially ruling the rest of the world via client nations, vassal states, and good old-fashioned colonialism.
They already own the biggest pork producer in America.
They already own the biggest dairy producer in Canada.
They already own most of the toll highways in Africa.
They’re debt-trapping half the globe with their Belt and Road Initiative.
Why not also go for control of the global reserve currency?
The economic war between $BTC and the $USD is a Thucydidean trap that will end in a Pyrrhic victory for America.
But the economic war that follows could be the end of Western civilization as we know it.