CBDCs Will Bring Tyranny: Lyn Alden & Natalie Smolenski

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Join us as we dive into a critical discussion about Bitcoin and CBDCs (Central Bank Digital Currencies) and the race for technological supremacy between the state and society. We are featuring expert insights from Lyn Alden and Natalie Smoleski on the What Bitcoin Did podcast.

Discover how the balance of power between the state and society can lead to the flourishing of liberty, and the risks posed by the increasing control of government in the digital age. Lyn Alden and Natalie Smoleski provide deep analysis on the breakdown of traditional checks and balances in the US, the evolving role of money as a tool of control, and the potential consequences of CBDCs on privacy and personal freedom.

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There’s some breaking point and generally that is either you know war or some kind of plague pestilence or economic collapse and then there’s an opportunity to refound but you know one of the reasons I’m calling for it now is like maybe we don’t have to wait for that maybe we can

Be proactive when things totally break that’s the moment where transformation comes and you could have a thing you kind of have this big rebirth and you know basically you elect people that finally things change and go in the right direction the opposite path like what we saw after wear is that people

Just want they want someone to blame and so you get you get a Monster In Charge that feeds on that energy and Promises we’re going to give you security it’s not your fault it’s their fault you blame some group that wasn’t involved and then you have some sort of horrible

Outcome today we delve into an intriguing concept that intertwines the Realms of government technology and Society we’re discussing a theory with Natalie Mesi and Lynn Alden Natalie is a political and economic Anthropologist and Lynn is the author of the book broken money this Theory explores the dynamic

Race between the state and Society for technological Supremacy and its profound implications on our freedoms how does this constant competition shape our world can Liberty truly flourish in this narrow Corridor of Power Balance and in the age of Bitcoin and Central Bank digital currencies cbdcs how does this

Race influence our financial system and personal freedoms join us as we unravel these complex themes and understand why in this digital era governance and money are more intertwined than ever before this is a theory put forward by um two political scientists James Robinson and Daron aogu to describe what happens when

The state and Society are in a race for technological Supremacy so so you know the state makes some moves then society makes some moves and there’s this this competition that actually improves both state and Society over time if the power is balanced um it creates this narrow Corridor in which Liberty can flourish

Because in their Theory Liberty is actually a product of the rule of law but the rule of law that does not or does not function as tyranny and so you know when does law become tyranny I mean there’s no absolute bright line but as the corridor collapses that’s when we

See tyranny emerge would you argue therefore that race is the narrow Corridor of Liberty in relation to money absolutely MH and so we’re in a race of Bitcoin versus cbdcs right now that’s right they scary stuff yeah um yeah we are like a frog being boiled slowly it’s

Almost like we need a a rethink of govern governance in a world which is digital MH because it feels far too easy for government to take too much control in a digital world fundamental innovation of the Enlightenment era political revolutions was separation of powers how do you prevent Power from

Just metastasizing well you separate it out and you you give different branches of government different functions and then um allow them to check each other’s power and that will keep it in check what we found is there there was some validity to that that worked for a time

But over time there ended up being this narrowing sort of revolving door between different branches of government um government and and Industry and so the power of the state has in effect been a shared point of Interest among all branches of government and so I I would

Suggest that the system of checks and balances has broken down in in the United States when you say it’s broken down like what are the key signals for that breaking down for you um things like increasingly legislating through federal agencies which are the executive branch instead of through Congress the

Federal government currently has uh we don’t know how many federal agencies because there’s no actual shared definition of what it is but each agency has the mandate to create policy in its sort of area of remit these are organizations not accountable to Congress for the most part not

Accountable to the American people often they function completely in secrecy they’re political appoes and so um in effect you have law now routinely being made through the executive branch and judicial collusion whether it’s uh the 1954 legislation that suspended in effect uh the Fourth Amendment and so we

Have a Byzantine uh bureaucratic system that in effect has created this unaccountable form of executive power and that is the consolidating state so is this is the state winning the race at the moment I would say yes it is and how much would you point to money being as a

A driving Factor behind this well money is just one mechanism of control but it’s an important one it’s it’s an information technology so um the money is a social institution whose purpose is to facilitate exchange well exchange is another word for communication the government always has a vested interest

In who communicates with whom about what and for what purpose until recently it’s not been possible to exercise a a certain level of granular control over Financial communication between people but now it is and with the cbdc that would get considerably worse absolutely transacting is also now intrinsically

Tied with verifiable identity and so it’s you know in effect the end of privacy as we know it then how much correlation have you seen between what is breaking in the financial system and the increase in control and kind of weird kind of decisions that are coming from central

Government I think there’s a big correlation and I think there’s also arguably an even bigger correlation in the political polarization that happens because people start to feel that something’s broken but then they can’t necessar put their finger on what’s broken in part because the way the system’s designed it’s very opaque the

Average person doesn’t know what the money supply growth rate is so they don’t know why things are maybe getting more expensive than their wages are keeping up with um they see the wealth concentration happening but then they differ on why that’s happening right they don’t see the differing kind of

Rates of credit that can be made available to different entities and how that can suck kind of value up to the well-connected um and so so all this kind of steps along the way there’s just so many opaque things that are happening with the money system that fuels some of

The big political issues that then polarizes people and then they end up kind of talking about the same sort of thing but in very different language and very different understandings of why this is happening or how to fix it because the the plumbing underneath is complex it’s opaque and even if you

Study money it’s it’s hard to figure out and these complexi is essentially apolitical it doesn’t really matter who’s in power the the same things tend to happen generally speaking I mean there’s you know there different flavors but in terms of the the money system you don’t

See a lot of change from party to party in that sense um they tend to to air in certain directions but really the especially in the US but also just elsewhere the the mechanism itself is just kind of perpetuating so you can make minor changes to that based on how

You vote but the but the actual structur is going to be different I think the politics kind of seems to matter more for the social realm whereas the financial realm changes very slowly and so is the social realm really becoming a distraction to the financial realm I

Mean that’s a question really for both of you because I feel like it is some people would argue that that’s intentional that basically those that don’t want issues focused on the money divide people folks on other things it’s hard to say how much that is well

Crafted but for example you see in some kind of campaign to stir political chaos you can extract a group to align with you against another thing even if they’re aligning against their own interests but this is so complex that how do we even try to communicate this

Out to a wider audience because if democracy is essentially broken it doesn’t really matter who You’ vot for and I don’t even know how do you start to communicate these things to people because it seems like it’s so far and so opaque re-election depends on being able to demonstrate to your constituency that

You have done stuff for them and if you’re an elected official generally that means passing laws and so you have a set of incentives for officials to just pass stuff just write laws pass them almost regardless of what’s in them but it’s more for the Optics to show

That you know I’m out here fighting for you and so you have a metast system of torts then you have a metastasizing set of government agencies executive agencies and all of this is being driven by the short-term career interests of people Staffing the machine of the state

And so it’s like a it’s like a downward spiral Market Dynamic what you were saying about deficits spiraling and people not knowing what to do is you H you have to reverse the entire vicious cycle you have to make it a virtuous cycle how do you do that by creating an

Engine of wealth formation Capital formation and economic productivity but that is opposite the interests of the people manning the machine of the state who are seeking their career longevity by doing precisely the opposite this is the clash of the political cycle and the economic cycle if you have the infinite

Money printer the essentially the design of the political system will ultimately lead to economic decline is there any examples where it hasn’t I mean it just feels like because this the state just always grows what way i’ phrase it right now is that we’re kind of seeing the

Failure of incrementalism so a lot of people think if we just get like our person in charge we can start turning this around and that person either well-intentioned or not gets eaten by the machine and the Machine just keeps going and then people say well if we

Only get the next person in charge we can turn this around and so all these kind of like small measures are just going against basically the Borg of of the bureaucracy of the system of as things are designed and historically you tend to see kind of like things go on

And on and on and on and then a gigantic Trend change and that’s when it really matters that’s when you can get either very virtuous outcomes or horrific outcomes there’s stable systems and unstable systems or marginally stable systems and the financial system has all of the traits of an unstable it’s

Because we’ve kind of extended the system as far as it can go out of bullets yeah we’re out of bullets and now we’re kind of dealing with the consequences of a system that always you know for the past say four plus decades or more was always unstable but that

Could be delayed deferred pushed onto someone else often in the developing world but now a lot of these things are starting to hit in the present um so we’re there right now yeah I think we’ve been there really since the global financial crisis what’s new this time is

That most of these kind of long-term debt cycle or institutional cleansing cycle things that we go through fourth hurting whatever you want to call it usually there’s a change over in the type of money we use you go from say Free banking to Central Banking with a

Gold underlay then you go to another Central Banking model we don’t don’t even have a gold underlay anymore so what comes out right we’ve never gone in this gigantic fi currency Global cycle have a whole sovereign debt crisis on a global scale and then see what’s on the

Other side of that that’s new uh there’s no precise way to tell what the Tipping Point is but when high inflation becomes hyperin that’s usually the moment in which the crisis of confidence really spreads beyond the small circle of people who may have been sounding the

Alarm about it all along you know I’m I’m reminded of of viar Germany when there was high inflation after they went off the gold standard in4 but hyperinflation didn’t really hit until the end of 1922 23 um and that was the point at which um you know Farmers

Stopped accepting the reice mark uh in compensation for their labor and the country was put on the verge of starvation money as law or the thing that is decreed by the state as legal tender when people just stop accepting it that’s the point out which there’s crisis and I would add

That it’s not even just hyperinflation that can do it it’s it’s the perception of the loss of control right and so for example there are a lot of developing countries today where they’re not in say outright hyperinflation they might just have double- digit inflation on a recurring regular basis it’s like a

Background part of life and there’s no expectation that they’re going to get it under control and that’s that’s kind of the world that’s historically a developing Market phenomenon fact I think that’s kind of on the train we’re going for is that you can call for kind

Of a central bank losing control in the sense that there’s there becomes no clear way where they can get it back down to their you know their kind of Prior Baseline of money supply growth and price level changes and things like that where there’s too much public debt

For them to tighten the way they want to and then the challenge is that when you have a lot of public debt interest rates start losing their effect um they become more complicated tools to try to slow slow down inflation um compared to when you have lower public debt levels and

Higher private debt levels and so when I get questions on hyperinflation stuff and they say we don’t have to be there the market still generally thinks the FED can get the current situation under control and maybe for a few years they can right you can cyclically get it under control potentially we’re not

There yet but I think we’re on this kind of multi-year process of of getting to that point and so are you basically saying particularly High double dig inflation is entirely within the rmal possibility within Western liberal democracy I would say within the 2020s I think next next few years perhaps

There’s one or two things that’s going to happen big deflationary collapse or they’re going to print a lot more base money which means inflation yes and what they did back in 2009 2008 is they radically increased the base money and they’ve been doing it ever since to

Never let broad money Collapse by any significant amount so historians have demonstrated how when an Empire or civilization is in Decline there’s an increasing rate of like stochastic tragedies conflicts crime shortages like basically the the level of ambient chaos in the society Rises slowly we’re seeing an increase of murders in places like

New York we’re seen a massive increase in crime so we’ve seen all those things you’ve just said mass shooting I mean like they just they’re more and more every year um they’re very hard to predict and so you know that Trend generally continues until there’s some breaking point and generally that is

Either you know war or some kind of plague pestilence or economic collapse and then there’s an opportunity to refound but you know one of the reasons I’m calling for it now is like maybe we don’t have to wait for that maybe we can be proactive when things totally break

That’s that’s the moment where transformation comes and you could have a thing you kind of have this big rebirth and you know basically you elect people that finally things change and go in the right direction the opposite path like what we saw after wear is that people just want they want someone to

Blame and so you get you get a Monster In Charge that feeds on that energy and Promises we’re going to give you security it’s not your fault it’s their fault you blame some group that wasn’t involved and then you have some sort of horrible outcome so that’s how you can

Get things like fascist or communism um the difference between a country spiraling into chaos and prospering is you know first of all in the character of the leadership exercising that violence so leadership absolutely matters 100% but then that leadership’s ability to institutionalize the workings of the machine of governance such that they

Personally are no longer needed so The Sovereign steps back behind the curtain and people who have grown up in relative peace and prosperity with relatively well functioning institutions often forget that there’s that violence behind the curtain and so they say things like why do we even need commodity money we

Have we have a perfectly good State Credit money system but when the curtain gets torn asunder what emerges so we’ve seen this what happens there when the dollar fails when these major currencies the dollar the Euro the Yen when they get such high debt to GDP when they have

All this in expense when they run into say an energy shortage you know a more sustained one that’s when you get these kind of big turning points and I think if in a world where Bitcoin was never invented I think the most likely approach would be they they would

Recapitalize with gold essentially uh obviously we’re in this world where we have Bitcoin and so and I think Jeff Booth described in your podcast it’s like comes on a couple questions does Bitcoin remain decentralized and secure yes then that is basically a predator towards any currency that is you know

More controlled more inflationary and it stands there kind of still growing and getting stronger we have an optimistic end thank you if you are listening and you haven’t bought Lynn’s book broken money anywhere you want to send people anything you want to share Natalie the Texas Bitcoin Foundation is launching

Our first book The Satoshi papers next year it’s clear that the race for technological Supremacy between the state and Society is more than just a power struggle it’s a defining factor in our quest for Liberty and the shaping of our financial system the insights from our guest today

Highlight The crucial need for balance and vigilance in this ongoing race remember the choices we make and the Technologies we Embrace have profound implications on our privacy freedom and the ongoing evolution of our society if you want to learn more about how money affects our society we recommend you

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