February 15th, 2022
Cryptocurrencies are the most important defensive tool against increasingly oppressive governments. In times like these, they are invaluable.
I have to confess. When I wrote the introduction for my “Revolutionomics”-column last month, I was well aware of the fed-up sentiment of many freedom-loving people. What I didn’t expect was how fast things would escalate. Since then, (mostly) peaceful protests have gained traction in many countries, first and foremost in Canada. The so-called “Freedom Convoy” quickly won support in Canada and worldwide, where similar movements sprung up.
The Canadian government first tried to frame the protesters as racists, then used the police to seize property from the protesters. After this didn’t work and support for the protesters increased, they declared a state of emergency, which still didn’t end the demonstrations. They used the police to break up protests – only partly successful. As the federal government was getting more desperate, they invoked the “Emergencies Act,” which allows them to “take special temporary measures that may not be appropriate in normal times.”
That leads me to today’s topic. When the “Emergencies Act” was invoked, Chrystia Freeland, the deputy prime minister and minister of finance in Canada, said the following:
“As of today, all crowdfunding platforms and the payment service providers they use must register […] and they must report large and suspicious transactions […]. This will help the risk that these platforms receive illicit funds, increase the quality and quantity of intelligence received […], and make more information available to support investigations by law enforcement into these illegal blockades. […] The government will also bring forward legislation to provide these authorities […] on a permanent basis.
The government is issuing an order with immediate effect authorizing Canadian financial institutions to temporarily seize providing financial services where the institution suspects that an account is being used to further the illegal blockades and occupations. This order covers both personal and corporate accounts.
We are directing Canadian financial institutions to review their relationships with anyone involved in the illegal blockades and report [them]. As of today, a bank or other financial service provider will be able to immediately freeze or suspend an account without a court order. In doing so, they will be protected against civil liability for actions taken in good faith. Federal government institutions will have a new broad authority to share relevant information with banks and other financial service providers to ensure we can all work together to put a stop to the funding of these illegal blockades. […] This is about stopping the financing of these illegal blockades. […] If your truck is being used in these illegal blockades, your corporate accounts will be frozen. The insurance on your vehicle will be suspended.”
If this didn’t have a chilling effect on you, you should reread it. Or watch the video. Truth be told, I didn’t want to write the second article in my column on money. But how can I look the other way when something as significant as that happens? What happened here is something that somebody I don’t like quoting summarized this way:
“In a country where the sole employer is the state, [opposition] means death by slow starvation. The old principle: who does not work shall not eat, has been replaced with a new one: who does not obey shall not eat.”
While it is clear that on paper, the Canadian state is not the sole employer, does that matter if the Canadian government can seize your or your employer’s funds? What does it matter that there are multiple employers on paper if the government can link your ability to acquire money with compliance? The answer is: it doesn’t matter; the effects are the same. If you are reliant on the financial institutions the government has control over, your choice is easy – as long as the government follows through with the policy: obey or starve to death.
That is even more significant if one considers the recent tendencies of governments worldwide regarding money: they relentlessly attack cash, develop and try to implement Central Bank Digital Currencies, and try out or implement social credit systems. Every single one of these developments would leave the public with less defense against governments. Governments can’t control cash like the money in your bank account. They can’t make sure you don’t give banknotes or coins to somebody the government has deemed unworthy of money. CBDCs would just mean even more control, giving governments (potentially) complete control over each transaction. Social credit systems are even more extreme, making it virtually impossible to act in a way the government doesn’t approve.
Whatever you think of these protests, one thing is clear: giving governments complete control over your money means that you are utterly dependent upon these governments. If they decide they don’t like you or anything you are doing, it could have dire consequences. The costs of opposition to the government are incredibly high: you might pay with your life. Do you want to live in a society like that?
The good news is: You don’t have to. There are structures you can use to avoid falling prey to governmental control obsession and the silencing of opposition. The most important is – of course – cryptocurrencies.
Cryptocurrencies function in a way that don’t require some central authority to make decisions. If used correctly, governments can’t seize cryptocurrencies. The flow of funds can’t be controlled or reversed. They work entirely independently from governments, and in the case of most cryptocurrencies, it doesn’t matter if some of the participants choose to follow the government’s rules. Because of the way consensus is reached, it is highly improbable that governments can impose their rules on even one cryptocurrency transaction, let alone all the transactions. Therefore, they can ensure survival, enable unpleasant voices to speak up, and give them the ability to protest a government they see as oppressive.
What this means is clear to everyone familiar with the history of Wikileaks. Whether you like Assange or not, it is clear that he and the whistleblowers did shine a light on atrocities by governments and government officials. The response? After being pressured by the government, most American financial institutions seized funds and blocked accounts linked to Wikileaks. One of many reasons for Wikileaks to survive was Bitcoin. That shows both the biggest flaw of the traditional financial system and one of the strengths of cryptocurrencies. The one is vulnerable to governmental intervention and pressure; the other is (almost) immune to it.
There are many other benefits of cryptocurrencies. Almost all of them are related to the lacking possibility of government intervention and control. For example, inflation is essentially a monetary phenomenon. If the money supply doesn’t increase, it is impossible to have sustained inflation. The money supply constantly increases for the government money, mainly for two reasons. The first is that it enables the government to spend more without directly taxing people. The second one is that this newly created money leads to the devaluation of government debt. Of course, this has many terrible effects on the economy – among them bubbles, price increases, malinvestment, and moral hazard. Bitcoin, for example, tries to solve the inflation problem by having a maximum supply of 21,000,000 coins, of which over 90% are already in existence. With cryptocurrencies considered as a whole, there are still problems, but this is a step in a less inflationary direction.
But let’s go back to the most crucial feature of cryptocurrencies in times like these: enabling oppositional voices. Oppositional voices are essential as checks and balances on government action. A society trying to silence these voices is a dangerous one, especially for those bringing about change: nonconformists, skeptics, critics. Cryptocurrencies are one crucial, maybe even the most important defensive tool against an oppressive government. And that’s what makes them invaluable.
Doesn’t history show how important it is to have defensive tools against oppressive governments? Maybe you already feel like your government unacceptably limits your rights? Have we already transitioned to overly oppressive governments without realizing it? Maybe. Possibly. If you want to know whether you live under a government that values freedom or under an oppressive government, you just have to ask yourself: What are the consequences of opposition?
The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.
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