It is time for a new world order

7926126812_33571c3544_b[1]Photo Credit to Luc Forsyth: http://www.flickr.com/photos/75878499@N03/

When the world is ran by some form of imaginary paper and digits on a computer, it is time for humanity to realise that both their perception of economics and politics is based on pure bullshit.

Bitcoin is probably one of the most innovative ways to show how flimsy the whole financial system is, it maybe the means to the solution of devaluing the philosophy associated with imaginary paper, or what we call money. The problem that we are faced with is not the financial crisis, that just flagged up the problem. No, our problem is money itself. Bitcoin is a beautifully simplistic definition of currency. It is deregulated to the fact that there is no single place where it is stored. It is stored on a open source system, so your details are basically decrypted somewhere in the cloud, not in the HSBC ledger. It is not a national currency, it has no central or federal bank and it is ‘mined’ according to the value of the currency against now the USD. And more importantly, its value will not be politically motivated by the lights of China or someone nasty.

But imagine if the Bitcoin  was the global currency and no other currency existed. It was mined to the extent to which the world could feed itself and attain a standard of living that we see acceptable. This is going to be low for our standards in the west, but more than adequate for someone in Haiti who is rummaging through the scraps. But anyway, we get to this stage of equilibrium and no more bitcoins are mined and is distributed evenly. We then just let nature take its course, remembering money can no longer be generated artificially.

This is will either turn the world into an autocratic quasi-communist system or an autocratic quasi-capitalist system where people will end up starving to death regardless. The problem is still going to be money, but now in the form of bitcoin. We unfortunately value everything that we have on something that is purely meaningless. Before the 1970’s we had the good old gold standard. But as we started growing a conscience in trying to create economic equality in western society, generating wealth out grew the supply of gold. In other words aggregate demand, that was generated artificially by government owned companies employing people who would otherwise be unemployed, led to demand for money. This led to the demand for gold, but there was not enough of it. So the gold standard was dropped.

We come to the system that we have now which is the floating exchange rate. This fluctuates with the base rate (which is rate of interest banks and lenders can charge their creditors) and quantitative easing as it fiddles with the supply of a currency, as well as speculative demand. So one currency is valued against another currency which technically has no value. So money is pointless.

But it has universal purchasing power of absolutely any product that you may need, from a prostitute to a loaf of bread. This is despite money having no value whatsoever. With this absurd logic, a pair of headphones which is priced at $10  is the same price as a grain of rice which is priced at $0.00005 because they are all bought with money which is valueless (10×0=0.0005×0). And it the same logic that leads to the unnecessary deaths of people who die of hunger and malnutrition, or of cold weather during the winter. These people are dead due to a lack of something that has no extrinsic value.

Deregulation was unfortunately necessary during the reign Margaret Thatcher after the collapse of Keynesian economics, it still caused the same problem of generating artificial supply of money. Money was seen to be as bottomless as a root beer float at A&W. It led to risks to be made as gains were seen to be limitless in the banking and insurance sector, as at the end of the day it was a massive ponzi scheme with everyday mortgage holders and loan bearers at the bottom of the pyramid. There is one good thing with bitcoin, it will eliminate the banks but it will not solve inequality.

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