This is an editorial from Andrew A, a Bitcoin educator and contributor to Bitcoin Magazine
Like the tragic figures of Greek mythology, China has a long and storied history of snatching defeat from the jaws of victory. The ruling class, in particular, has always had an insatiable appetite for self-flagellation. Banning bitcoin is just the latest chapter of this sad and destructive story.
Blessed with an abundance of natural resources, a huge population, and full access to the South and East China Seas along its 9,000 miles of coastline, China was perfectly set up to be the realm of all ages.
And for almost 2000 years it dominated the region.
Long before the English and Spaniards, China built entire fleets of treasure ships that could traverse the far reaches of the Earth — capable of reaching even the New World centuries before Columbus sailed.
If things had been different, America might very well have been subject to the emperor rather than the king, and Mandarin would have been the predominant language in the world, not English.
But this was not to happen.
Spurred on by jealousy, fear, and resentment against her own burgeoning and prosperous merchant class, the ruling elite — known as the Central Planners — ordered that all ships be set on fire. An act of pure self-immolation, it turns out.
This stranded the Chinese people, unable to explore the outside world, and left them isolated and vulnerable to the horrors of the Opium Wars that brought colonial Britain to their shores.
The next cabal of central planners to wreak havoc and destruction was the communists led by the chief planner himself, Chairman Mao. And again, the target of their wrath was an emerging middle class. This time, the productive farmers of rural China were the sacrificial lambs for the slaughter.
The Red Guards, Mao’s cadre of fanatical supporters, marched across China diligently clearing the so-called “Five Black Categories”. These include: wealthy peasants, property owners, counter-revolutionaries, rightists, and heretics of any kind.
After society was uprooted, millions of farmers were then collectivized and forced into labor camps to produce the crop. Of course, the famine soon followed and millions perished. The illicit possession of just a grain of rice was sufficient justification for the execution of entire families.
This living nightmare is never fully digested.
With the rise of the internet, the central planners were even working on it again. Paranoid fearing that their power might be challenged, a digital firewall was established. Like the Great Wall of China centuries ago, this wall was intended to keep the population captive, docile, and sheltered from potentially corrupting outside influences. Junk speech is censored and the crimes of the past cannot be discussed.
How else could a society kneel before the altar of a genocidal maniac, the exterminator of its ancestors? To this day, Mao is worshiped as a god. And so, the fading memory of these atrocities and even the estimated 50-100 million deaths1 were not enough to end the vicious circle.
No, the central planners were just getting started.
That’s right, the Chinese butchers were getting ready for their next amputation.
Perhaps the most devastating, self-mutilating and masochistic decision of all was the one-child policy. Here’s the sickening recipe: order women to stop childbearing (for the common good, of course) and decimate the population by several hundred million more. By 2050, the Chinese population is expected to halve.
Then, to make humiliation worse, printing money to artificially lower the country’s currency, make production cheaper and enslave the population as factory workers to boost economic activity and offset the demographic slowdown.
The excess money is then (as always) misallocated and spills over into pointless real estate projects. Often houses, apartments and buildings are not even bought to live in. They are bought as stores of value – a place to take shelter from the rapidly increasing supply of money. This is how China’s “ghost towns” came to be; crumbling and dilapidated monuments to the unborn and aborted millions.
And so, between collapsing demographics, a bursting real estate bubble, and a zero-COVID lockdown policy (another downer from central planners), China is on the brink of a potentially crippling financial crisis.
The money printers must therefore run even hotter, steal what little remains of the productivity of the people below them and create an increasingly devastating disaster by inflating bubbles throughout the economy.
Thus, every fatal mistake on the tortuous and tortuous path is a result of the nihilistic and ultimately deadly belief in central planning.
And this is where that path leads: banning bitcoin – a pure outgrowth of the free internet and rejection of centralized power, an essential tool to fight the coercion of fiat.
The central planners, of course, deny this. Cornered during this summer’s WEF event, Prime Minister Li Keqiang made some noises about potentially easing lockdowns, but spoke out strongly against stimulus injections and inflation:
“We will not resort to super-sized stimulus or excessive money pressure to achieve a high-growth target. That will overload the future.”
Not only is this promise empty, it is in fact a brazen and obvious lie for the following four reasons:
1. Printing money is not optional in a fiat system.
Over the past 20 years, China’s M2 money supply has grown by an average of 14% per year. That means the money supply has doubled every 5 years! With a total debt-to-GDP ratio of over 300%, compound interest requires more and more prints. That’s how a debt-based fiat system works.
Money is circulated in the economy through the issuance of debt. You can only pay off the interest on this debt by, you guessed it: printing more money, or debt creation.
Rinse, wash, repeat. It is the snake that eats its own tail.
And structurally there is no reversal or even tempering. The system is built on a one-way track where it will be blown up or destroyed. Not that the central planners really like destruction, other than that…
2. …Stopping the printer causes a revolution.
This is doubly true of a centralized power structure that relies heavily on coercion through the printing of money to control the population. It is no coincidence that paper money was first developed by China’s central planners.
The recent liquidity crisis has already led to bank runs and even demonstrations, which are extremely rare in China. But don’t worry, military tanks responded quickly, ready to destroy any sign of insubordination in the echoes of Tiananmen Square.
Worse for central planners, record numbers of homebuyers are refusing mortgage payments in more than a hundred cities. The contagion began with Evergrande last year when it defaulted on much of its $300 billion mountain of debt. The real estate sector, which accounts for 30% of economic output, is now under threat.
When things go bad on this scale, social unrest is never far away. The CCP knows this and has ordered banks to bail out the struggling developers, i.e. to print more money.
3. The Chinese economy is export dependent.
Printing money is known to be a race to the bottom. Whoever devalues the currency faster has a competitive advantage. This is because domestic goods become relatively cheaper in international markets. China has taken advantage of this with great success, consistently pushing the yuan down to boost its exports.
But why not just switch to a consumer-based economy and let the yuan soar? As discussed, China’s recently abolished one-child policy is expected to halve its population in the next thirty years. There will not be enough of a population left to support this kind of transition. A consumer-based economy also means that people can actually choose what they want. Something that central planners cannot fathom.
4. They have already banned bitcoin.
And finally, if printing money really isn’t on the table, why close the emergency exits? China is one of the few countries to maintain a complete ban on bitcoin, including ownership, and has some of the strongest currency controls to prevent capital flight.
Instead of bitcoin, of course, China’s central planners are doubling down on the digital renminbi, giving them near-unlimited control over the population and tightening the noose even further.
Does that sound like money printing isn’t in the cards? (Rhetorical question).
As always, the central planners are busy closing the gates, closing the hatches and closing all possible escape routes.
Bitcoin, as the ultimate self-determination tool, cannot be tolerated.
Like the Great Wall, the digital firewall, or setting fire to treasure ships, central planners must isolate their victims and cut them off from any hope of rescue.
Then they can go about their business undisturbed.
The (central) plan is burning through inflation. Because if something goes wrong, just print some more!
1. The fact that the number of deaths is unknown reflects the complete horror and utter chaos of the time.
This is a guest post by Andrew A. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.