The Bitcoin Proposition

  • Posted: November 29, 2018
  • Category: Politics
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Back in the dimly misremembered past, I kept my family fed by working as a contract engineer. One of my weaknesses is a congenital disdain for the mundane. And so while plying my stolid life of trade, I sought fulfillment in imagining something more heroic than the prosaic task of bringing home the bacon. On the IMAX screen of my imagination I starred as Paladin, the movie in my head flickering between Richard Boone and his namesake, the semi-mythical warrior delivering justice in the realm of Charlemagne. But either way, my mission, my raison d’etre was the same – “Have gun, will travel”, though in my case it was “Have pencil, will travel”.

I know for a fact that God kept me close in those days’ as despite my somewhat suspect sales skills I was able to provide for my family. Perhaps not in the style hoped for in our marriage vows, there being a lot more “for poorer” than “for richer”. But in a valuable life’s lesson, my kids didn’t find out until adulthood there was anything more luxurious than a visit to McDonalds. With a full time mom/homemaker and four kids at home, I was on my own selling engineering skills to an endless succession of old men – old men outfitted with that special armor plated sales resistance given only to accountants or engineers. I was taught in a hard school the value of my engineering skills.

Surprisingly enough, my classroom training in pushing paper and calculating the obvious, honed to perfection in my previous job at an engineering company, was of limited interest to those who might hire me. What did catch the interest of those flint eyed engineering managers was field experience, most particularly the ability to go out in the mud and figure out what was wrong.

Perhaps my mental image of myself had more than a touch of Walter Mitty about it, but you do what you have to do to get up in the morning when the day’s task is to make cold calls. Believe me, if you have never had to make cold calls, you have missed one of life’s most powerful formative experiences. It was my luck that the market’s interest in troubleshooting skills fit well with my mental image of myself, a confrontation in the narrow pipe racks of a refinery – perhaps not mano a mano, but hey, an engineer takes what he can get. My motto slowly morphed into one more in keeping with what I actually did, “Have hard hat, will travel”.

Being a mechanical engineer with a very limited understanding of machinery, I naturally gravitated into electrical engineering, an area safely away from mismatched gears and dirty lubricating oils. Working with electronics in environments of highly flammable gases stumbling over high voltage electrical equipment, I quickly gained a very healthy respect for grounding.

In a refinery, a power plant or any other industrial area, everything – EVERYTHING – must be securely grounded. It is a fact of life, one of those Murphy’s Law things, that electrical charge builds up on everything all of the time. This electrical charge comes from the air, the movement of fluids in a pipe, less than perfect electrical conductors/terminations, demons in the pixie dust, any number of different causes. Left to itself, a piece of steel, an electrical system, a man walking down the pipe rack, virtually anything will accumulate electrical charge until it builds high enough to discharge. Go outside during a thunderstorm and watch those bolts of lightning. That is a system grounding itself.

My present perspective on life is inevitably the result of the baggage I carry. I tend to see the world a bit like a process plant. As it happens, this perspective aligns well with the warm and comfortable touchy feely nature for which friends and family celebrate me. The ground in an electrical system or process plant is the ground underneath our feet, the planet Earth. Even a 20,000 HP electrical motor is a puny thing compared to the Earth. If that motor or anything else, even a massive storm front, starts to acquire an electrical voltage different from that of the rest of the world, sooner or later there will be that flash of white hot energy. One might think of ground as reality. That bit of white hot energy is a reminder of the proper perspective – don’t get too full of yourself whether a massive storm front or a simple self absorbed engineer.

As I said, I can’t help but see our culture as a bit like a process plant. The grounding rod of our culture is our connection to reality. Not the reality of the Twitterverse or cable news, not even the reality of Washington or even of the United States, but Reality, the reality of the Universe. The psuedoreality of cable news is nothing more than a rug to walk across. We watch the talking heads, the news ticker crawling below, and build up an electrical charge on our ungrounded body seeking to create a bit of that white hot energy when our spouse walks in. In a process plant, or in your house for that matter, running a copper wire that connects everything being grounded down deep into the earth creates a solid ground, a solid connection to reality.

As far as any electrical system made by man is concerned, the Earth is reality. If you get a voltage too different from the Earth’s, Zap!!! Something gets fried and you smell that acrid odor once thought to be the scent of the Devil. Interestingly enough, in low voltage electronic/computer systems, imperfect grounding – (that is a defective ground, not bad enough to cause that Zap!!!, but perhaps more like a kink in a water hose) causes the system to begin behaving erratically. A bad ground can cause a control system to lose its mind – so to speak.

One might envision that cultural analog for the copper ground wire of an electrical system to be a culture’s historical understanding, that thick strand of schoolroom history, mix of cultural good manners and taboos, religious training and schoolyard encounters that serve as our guiding stars. It may or may not be the reality of the Universe, but it keeps us, as individuals and as a culture, from experiencing too many high voltage Zap!!! encounters.

But I think many people are starting to realize that our cultural ground wire is eroding away. Schoolroom history? One might as well watch old YouTube reruns of the Rocky & Bullwinkle Show for episodes of Peabody and Sherman’s Wayback Machine. Cultural good manners and taboos – what constitutes good manners has become the Schrodinger’s Cat of daily life. Religious training? Is that a hajib or are you just worried about rain ruining your hairdo? Schoolyard encounters? Just say “No to bullies” and demand “safe spaces”.

The disappearing ground rod is certainly is as good an explanation as any for the angry schoolmarms masquerading as late night comedians hectoring our national consciousness. The increasingly distorted worldview on display on CNN and NPR, as well as Fox, bears more than a passing resemblance to the problems of a defective ground. If you will remember my earlier explanation of the effects of a compromised ground – controls acting erratically, what the plant operators call ghosts in the system.

Just consider the great questions the leading nation of Western Civilization is struggling to answer, fundamental questions capturing the attention of the nation. A respected jurist with a sterling reputation forced to appear in tears before a Senate committee – as a drunken teenager did he once make advances on a drunken teenage girl in a dark bedroom some thirty-five years ago? Does the possible presence of a Native American great-great-great-grand parent count as the much coveted minority status desired by a US Senator? Should men self-identifying as women be allowed to use Ladies bathrooms? Can a cake decorator be forced to decorate cakes?

It would be funny if it didn’t tear at your heart. Life hands each and every one of us various indignities, even scarring encounters, deserved and undeserved. But while we all enjoy our pity parties wallowing in the injustices of life, there are greater issues. To mix metaphors, we chatter at recess in the schoolyard about how unfair the teacher is while outside the fence in the dimly seen dark hover the pimps and drug dealers, sharp crags of reality drifting in and out of view.

While we shed rivers of crocodile tears over images of immigrants roughly handled at our borders, our urban populations indulge in ubiquitous and largely guilt free drug use, that same drug use fueling the increasingly violent drug cartels south of our border driving those immigrants to our borders. Across the oceans are grounding points aplenty, the shaky edifice built on sand that is the European Union, the Middle East where fragile autocrats increasingly abuse volatile populations that hate each other, an Asia where China seeks to recreate the Greater East Asia Co-Prosperity Sphere while returning the population inside its own borders back to the days of Mao.

But while we obsess over the long past behaviors of teenagers in the grip of alcohol and raging hormones perhaps the most dangerous reality of them all hovers nearby. Our government is a spending machine out of control. In 2018, the United States, our government, spent on our behalf, $ 1.8 trillion more than it took in. While $ 1.8 trillion is chump change compared to the Obama years, it is still a big number. Our total federal debt is said to be $ 21.6 trillion. I don’t know about you, but these numbers become meaningless to me. What is a trillion? I can’t answer that. I thought only astronomers used numbers like that. My calculator only goes up to 9 billion and change.

What is even more disturbing is that these numbers, if in fact we can call them that, are in nature political promises. Our government deals in promises. Politicians love promises like alcoholics love whiskey. A political promise is something for nothing. As a politician, I get all the benefits today and somebody else pays for it tomorrow. Who wouldn’t love a deal like that, junkies certainly do.

How do you calculate the cost of a promise? Blank checks are dangerous. Any one with children, or a spouse, has first hand experience with the costs of a promise. So when the media’s talking heads move from something they know, like gossip, to something outside of their experience like facts or numbers, remember how promises work. “Nobody knows” is a fair guess as to our true indebtedness.

Does anyone really believe that we will ever pay down our national debt? Does anyone believe it will ever stop growing? Was it even mentioned in the recent elections? And if it had been, would you have changed who you voted for? Would you have believed anything they said anyway?

Promises are a chancy proposition, even government promises, especially government promises. We only have to remember:

“If you like your health care plan, you’ll be able to keep your health plan.”


“that’s a red line for us and there would be enormous consequences . . . if we see the use of chemical weapons”

It’s easy to pick on Mr. Obama, because he was a Black Belt master of the insincere promise. But name a politician of recent vintage who wasn’t adept at the game of promises. I also remember:

“We gonna win so much you may even get tired of winning.”

If politicians win office by making promises they know they can’t keep, and we know they won’t keep, we have no one to blame but ourselves.

But there is another promise, a promise made across generations by politicians of all parties. That promise is the promise of the dollar. We sometimes forget, we are encouraged to forget, that a dollar bill, or a trillion dollar bills, is a promise. It is a promise that we can invest the value of our work into that dollar and that we can exchange that dollar at a later date for the value of that work. The promise of the dollar is that the value we receive for our labor can be moved across time and space safely – without losing its value.

Perhaps while flogging my own hobbyhorses, our collective amnesia of who we are and how we got here, I have missed the true ground rod of the human universe – money. While money is simply a useful tool allowing the creation of civilization, our relationship with it is anything but pragmatic. I quite like my table saw, but I don’t think I love it, while money – it’s complicated. The Apostle Paul cautions us that the love of money is the root of all evil.

Money may or may not be the ground rod keeping cultures from descending into a bout of navel gazing that dooms them to a future violent encounter with reality. On the other hand, money makes a strong claim to be the ground to reality for individuals. Money brings everyone back to reality with a very short leash.

In our present age of government with a kind face, everybody’s favorite uncle and sugar daddy, it is useful for citizens to remember that government is not our friend. Government is a tool as well, a useful tool but also a dangerous tool. The picture of something like a chain saw comes to mind. Government is a parasite, a consumer creating nothing. But like the bacteria in our intestines, many parasites perform a useful function. Bottom line is that we would all kill each other if not for government, so make no mistake, government does serve a useful function. But like the bacteria in our gut, government can get out of control with fatal consequences. Perhaps the clearest sign of a government slipping the leash is deficit spending.

The deficit spending and accumulated debt of governments, actual, accrued, forecast and promised, are very complicated subjects. Remember that humanity’s cleverest and most unscrupulous members have been working to complicate governmental finance as long as there have been governments. Their efforts have met with such great success that few indeed can understand it. Certainly I don’t and so I will refrain from further comment. There is no need for more mud in the swamp water.

But you don’t need to understand government finance to understand its effects. When the government creates money in excess of the economy’s growth, it makes each existing dollar worth less, an action usually known as inflation. Inflation is the kind of tax beloved by Libertarian’s, a flat tax. Unlike income tax, everyone pays the inflation tax.

Inflation is easy to see but hard to measure. We all tend to get lost in the forest of decimals, while mistaking the anecdotal for the universal. Nothing is so hard to quantify as a bunch of numbers. But we can see inflation’s effects nonetheless. Our family’s first home, purchased in 1976, was at 602 E. Washington Street in Pasadena, CA. My wife and I bought the house, a fixer upper in a disreputable neighborhood, for $ 25,000. The Zillow website now estimates that same house’s value at $ 881,495. Over the span of 42 years, the house has appreciated in value by 35.26 times, or 3,526%.

Looking at the house and neighborhood on Google, I must conclude that neither the house nor the neighborhood have improved in the course of that 42 years. A modest 60 year old house, in disrepair 42 years ago, is probably no great prize at the century mark. Government statistics tell me that US inflation over that span of 42 years is 440%. My old house has appreciated by 3,526%. With such a discrepancy, one wonders at the value of government statistics. Who is smoking what? Or in the immortal words of Aretha Franklin, “Who’s Zoomin’ Who”?

History, at least that history outside the schoolroom and the Rocky & Bullwinkle Show, is clear on the fact that inflation is virtually a defining characteristic of governments, something along the lines of – “all mammals are warm blooded”. It’s just too darn tempting to spend more money than you have, especially when you can print more money. Human nature is what human nature is. Back in the days of precious metal coins, before printing presses and electronic ledgers, governments would add a bit of lead or nickel into the precious metal coinage, or simply make the coins smaller. Of course if you collect coins, you realize America has already been down that road, back before inflation made American coins superfluous.

As “human rights” have rendered the Bill of Rights a slipstream into an irrelevant cul-de-sac, we have lost our understanding of what rights are, at least as conceived in the US Constitution. The original Bill of Rights protected citizens from their government. None of the Founding Fathers had any illusions about government. They knew government was an evil, but a necessary evil. And so they focused great concern on safeguards protecting citizens from their own government, specifically keeping the power to create money out of the hands of the Federal government.

Before we all snuggled into the warm fluffy security blanket that is a central bank, protection of the dollar from the government’s control was a serious matter that serious people took seriously. Presidential campaigns were won or lost on this very issue. The picture of Andrew Jackson on the $20 bill is an irony understood by few in the present age, a massive irony underscoring our profound ignorance of our own past.

The fiery Jackson was a man known for his ability to hate – with a passionate intensity seldom equaled. Andrew Jackson was a wild man in his hated of central banks capable of creating money. He would have taken his cane and soundly beaten anyone daring to suggest such a travesty as his own picture on paper money. Perhaps that is why Andrew Jackson is belatedly being replaced on the $20 bill by a figure more in tune with today’s sensibilities.

But we are where we are. What is to be done about the American indifference to sound money? One can stand on the tracks swinging a red lantern in front of the freight train that is American government spending. Or not. Why make things icky for the maintenance crew tasked with cleaning up the tracks? It is in virtually no ones interest to stop, or even slow the train of governmental spending. Except of course future generations, our children and grandchildren who will most likely suffer the white hot energy flash that is a return to Earth, an America grounded in reality. But then 50 years of abortion on demand have given powerful evidence to the question of how much the welfare of our children and grandchildren mean to us.

No matter our pious thoughts about saving the world for our children – yadda yadda yadda. In the vernacular, money talks, bull**** walks. Or as Jesus taught, “where your treasure is, there your heart will be also.” My generation talks a good story, but our walk comes up a bit short when it comes to future generations. We have found it better to build windmills in the service of a fantasy rather than live within our means.

Perhaps the unasked question before us is our conception of our duty as citizens of the United States. If our government and our fellow citizens have decided on a course of action that seems indifferent to the future, a flagrant invitation to future disaster, is it our duty to go along? At what point is it right to stop standing on the tracks waving a lantern, but instead exit the train and seek safety? And if we feel it right to take steps to protect our family and ourselves from what we see as reckless disregard for the common safety, what can we do?

As I noted earlier, the debasement of money, i.e. inflation, is virtually a defining characteristic of government. As a result the question of protection from a spendthrift government is an old one, with an answer as old as government itself. Gold. Gold and to a lesser extent, silver, are the traditional refuges of the citizen from the ravages of governmental mismanagement and confiscation.

Gold is all well and good, a tested answer over millennia to inflation. But gold and silver are a bit old fashioned, a bit on the apocalyptic side, desirable when the barbarian hordes sweep down over the Canadian border but suffering from severe disadvantages until that time.

Precious metals are illiquid, easily stolen, difficult to buy/sell and transport. It’s hard to use gold to buy groceries unless we shop at Whole Foods. It is also useful to remember that in the not so distant past, for nearly fifty years, it was illegal for US citizens to own gold. The US government, home of the brave and land of the free declared gold illegal in 1933. At that time, all gold owned by US citizens was required to be sold to the US government, at a fixed price set by the US government of course. Until the evil President, the much despised Richard Nixon legalized gold in 1971, gold ownership by US citizens was illegal. Even today, gold owned by US citizens not documented to have been acquired after 1971 is subject to governmental confiscation without compensation. So much for that kindly sugar daddy.

It shouldn’t surprise you that no one is more serious about money than governments. When enough of their citizens begin to abandon the money of the government in question, that government is usually not a good sport about it. Governments tend to adopt a very hard line when citizens attempt to free themselves from an inflating money supply.

It, criminalization of gold, can happen again. Perhaps in some future progressive administration, maybe during the administration of our first American Indian President – that sachem of the Cherokee’s Elizabeth Warren, agents of the ATF will come for both our guns and our gold.

But perhaps there is an alternative, therein is the promise of a cryptocurrency. Bitcoin is the name of the first and the most well known cryptocurrency. Bitcoin is a name in the 2nd or 3rd tier of headlines, not yet on the radar of The View or the subject of newly elected Rep. Alexandria Ocasio-Cortez’s wise words. When mentioned, the media treats Bitcoin as a stock with shades of Ponzi scheme about it, perhaps the digital age’s version of Floridian swamp land for sale. Bitcoin is something new and unique, hard to understand and volatile, very volatile. Are bitcoins the first gold coinage in a world now using wampum or magic beans useful only to dupe the Jack’s of this world in search of a Beanstock adventure?

Bitcoins are a new proposition, perhaps groundbreaking, perhaps not. There are certainly many attractive things about it. Bitcoins are like gold, in that there is no central authority certifying their value other than the owners of existing bitcoins, bound by the mathematics of the system by which they are created and governed. There is a finite number of bitcoins, with no possibility of any more than mathematically allowed. So that they cannot be printed without limit and devalued like government money. Andrew Jackson would nod his head in understanding. They are uniquely matched, Bitcoin and owner, creating an almost unbreakable security of ownership and transfer. Bitcoins are liquid over time and distance, easily converted into dollars, euros, whatever.

This is early days and bitcoins are a new proposition, but an interesting proposition. If the apocalypse is upon us, whether the coming of Skynet or Canadians crossing the 49th Parallel, gold is probably a safer bet. But in a world where electricity is available and the Internet functions, Bitcoin holds out the promise of money free from governmental control. Money that serves as a store of value, easily transported, easily hidden and easily used. Of course this sounds like a drug kingpin’s vision of heaven, but it also sounds like a citizens protection from a reckless government.

Whether Bitcoin or something else, there is little doubt that the world is in search of a substitute for the US dollar. For a long time, the US dollar has served as the monetary ground for people around the world. The dollar offered safety to those at risk of their own governments. It offered the monetary equivalent of a universal solvent – everyone everywhere would accept it. It offered liquidity, value of any amount could be transacted in it. And America offered it freely to the world, without constraint or cost.

Of course there were costs to America to offer its dollar to the world for their use. But there were benefits as well, and the benefits are large. There was a saying in Denver’s oil patch,

“When the price of oil drops, corporate might catch a cold, but the field will get pneumonia.”

When times get hard, corporate headquarters in Houston might lose a few jobs, cut some dead wood, but the Denver office is toast. The same is true of America. During boom times, America has lessened its inflationary impact by exporting our inflation to the world. In hard times, America has lessened its deflationary impact by exporting our deflation. We have been exporting the consequences of our political promises for a long time, usually to the poorest of the poor, including and especially our own working class.

One might shrug and say – quid pro quo, costs and benefits. Fair enough, but the past ten years have seen America flooding the world with dollars and the world hasn’t had much choice but to grin and bear it. Because of our size, our transparency and our open political system, the dollar is pretty much the only game in town. But we have been exporting an awful lot of inflation lately, trillions of dollars per year. And serious people are concerned – looking at the American political scene. It looks like “Crazy Town”. How long can this go on?

Bitcoin and its cousins may not be the answer, but the world, including citizens of the United States, are looking for one.


3 Responses to “The Bitcoin Proposition”

  1. Jeff Esbenshade says:

    I have electrical engineering question. If you wanted a light weight truck

    Peterbilt would build a unit that had aluminum frame, wheels, hubs, drums, cabhood

    If you mixed with steel you got electrolysis. Why does a new Ford pickup have

    aluminum cab and box attached to a steel frame not get electrolysis?

    I wrote a paper on Social Security and spoke at one AARP social club.I asked the

    state AARP director to speak at other clubs. He wanted to read my paper before

    he would approve my speaking. After 3 weeks of reading my paper HE had AARP

    returned my dues, said my thinking on SS did not match AARP’s The truth will set

    you free, but not if its a subject that govt disagrees with you.

    The value of world trade is so large, only the dollar can do the majority of the job.

  2. Greg Vaugh says:

    We certainly have a “spending problem.” Not sure we can outrun it with increased income. A central issue is baseline budgeting, used since 1974. Each year we compound the cost of government, but we are lead to believe that “cuts” will be made. As an example, an agency spending $300 billion, and using baseline budgeting is slated for an increase to $350 billion. The administration or congress decides on an increase to $325 billion instead with the $25 billion difference sold to us as a “dollar cut” in spending. It’s a scam.

  3. Dave says:

    That was a good insight regarding Andrew Jackson. I believe they tried to kill him for refusing a central bank.
    The Federal Reserve is mostly independent of our government, and is owned by the mega banks and is subservient to the BIS (Bank of International Settlements; which is the central bank of central banks. The Fed creates money and sends us the bill. The Fed has never really been audited fully, but they have benefited from their ‘cash cow’, the U.S. However, currently they seem intent on bringing down our economy by raising the interest rate at a most inopportune time. They kept the rate at near zero while the previous president was in office. Businesses were able to borrow at near zero rates to buy up their own stock, and artificially prop up the stock prices. Now they owe billions (like GM and GE), and are in trouble.

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