WASHINGTON, July 3, 2014 — China, India and Burma commemorated the 60th anniversary of a treaty of non-aggression and non-interference. Chinese President Xi Jinping said on the occasion, “We should promote mutual learning and draw on all that is good created by different countries, nations and civilizations in a joint effort to create a splendid human civilization.”
As a rising power, China is constantly trying to reassure the world that its rise is not a threat to the rest of the world. The message is nearly always the same: China appeals to humanity, especially that part of humanity that believes it is excluded by the current global socio-economic order. It promises that under a new order led by China, things will be better for most of humanity.
The promotion of “mutual learning” is a common theme from Chinese leaders; they know the current global order downplays the achievements of non-western nations. They want to emphasize that its roots are in race entitlement, ethnic entitlement, class warfare, and elitism based on theft.
It is not helpful in a world hungering for honesty, morality and economic liberty for China to use international events to hurl insults at the West, especially if no action follows.
The talk from China to non-western states is soothing, but if humanity is to create a great global civilization, we need from the outset for societies to behave more morally towards each other, and for people to be more honest within societies. One crucial element of this is for the new order to have monetary foundations in “real” money, not fiat, make-believe money. A full stomach today has the same satisfaction to a human being as a full stomach 10,000 years ago; real money should be able to keep its value with relation to real things.
Culture reflects economy; dishonest currency has created dishonest societies. A dishonest global order has endorsed fascism because the dominant economic powers put business and government into collusion. The quick mind believes that the result is business running government, but the patient mind knows it will end up badly for both, and worse for business. Government elites will try always to ensure that the legal system looks after their interests before anyone else’s.
The global community needs an honest global monetary system — money that cannot be manipulated for short term advantages for anyone, by anyone. Money was not a creation of bankers; it existed long before bankers emerged on the scene. Money was created mainly as a store of value to facilitate trade, and real money should hold its value.
Fiat money controlled by central banks has ephemeral value. Because of that, its use will always create pressure for minimum wage laws. When central banking favors an elite, people will demand a minimum wage to keep the balance of wealth from throwing them off entirely, and politicians will answer the call.
Honest money can never be printed at a whim, thus distorting the whole price signaling mechanism that is at work in every economy. Honest, real money can’t be manipulated to reward elites at the expense of the rest of us, so there will be less pressure for laws to further distort an economy already distorted by money manipulation.
If political and business elites are dishonest in a culture built around dishonesty, central banks are a key component of that dishonesty. That culture spreads to every level of society. Because few of us have time to understand monetary economics, propaganda can easily hide the real source of the problem.
A government that really is for the people will not want to control the money supply. With real money, if people cannot afford goods, prices will adjust downwards until they can. With fiat money, prices consistently rise. Government is called in to fix that problem with income policies, increasing perceived dependence upon it.
Markets, especially in the U.S., are reacting to the problem of central banks by creating alternatives to central-bank money. Bitcoin is such an alternative. There are also ready alternatives like gold and other precious metals. There are economic questions for the likes of Bitcoin: Why not make it global? Why not limit the total to a billion or so units, so that people will know its availability in the future?.
At least the free market sees a problem and responds; what has China’s reaction been? Political posturing and speeches. Xi said that “Hegemony … is not in the genes of the Chinese.” That’s nice; let him prove it. Will a global order dominated by China rest on the renminbi, or on some other fiat currency that China and its friends will manipulate for their own benefit? Will it honest, and based on honest money? Bitcoin, whether it fails or succeeds, has demonstrated that there are other solutions and always have been. Let markets handle money issues; after all, it is people who do the buying and selling.