This is an opinion editorial by Andrew A, a Bitcoin educator and contributor to Bitcoin Magazine
Like the tragic figures of Greek mythology, China has a long history of tearing defeat from the jaws of victory. Its ruling class in particular has always had an insatiable appetite for self-flagellation. Banning bitcoin is just the latest chapter in this sad and destructive story.
Blessed with an abundance of natural resources, a massive population, and full access to the South and East China Seas along its 9,000-mile coastline, China was perfectly set up to be the empire of all ages.
And for almost 2000 years it dominated the region.
Long before the English and the Spanish, China built entire fleets of treasure ships capable of crossing the far corners of the earth – capable even of reaching the New World, centuries before Columbus sailed.
Had things been different, America might well have been subject to the Emperor instead of the King, and Mandarin would have been the world’s dominant language, not English.
But this was not allowed to happen.
Spurred on by jealousy, fear and defiance of their own burgeoning and prosperous merchant class, the ruling elite – also called the Central Planners – ordered all ships to be set on fire. An act of pure self-immolation as it turns out.
This left the Chinese people stranded, unable to explore the outside world, and left them isolated and vulnerable to the horrors of the opium wars that colonial Britain brought to its shores.
The next cabal of central planners to cause chaos and destruction were the Communists under the master planner himself, Chairman Mao. And again, the target of their wrath was a rising middle class. This time, the productive farmers of China’s countryside were the sacrificial lambs to the slaughter.
The Red Guards, Mao’s cadre of fanatical supporters, marched across China, eagerly purging the so-called “Five Black Categories.” These included: rich peasants, property owners, counter-revolutionaries, rightists and heretics of all kinds.
After society was uprooted, millions of farmers were then collectivized and forced into labor camps to produce crops. Of course starvation soon followed and millions perished. Unauthorized possession of just a grain of rice was justification enough for the execution of entire families.
This living nightmare was never fully digested.
Indeed, with the dawn of the internet, the central planners were at it again. Paranoid for fear that their power might be challenged, a digital firewall was set up. Like the Great Wall of China centuries ago, this wall was intended to keep the population captive, docile, and shielded from potentially corrupting outside influences. Unsolicited speech is censored and the crimes of the past cannot be discussed.
How else could a society prostrate itself at the altar of a genocidal madman, 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 dead1 was not sufficient to end the vicious circle.
No, the central planners were just getting started.
That’s right, China’s butchers had been preparing for their next amputation.
Perhaps the most destructive, self-mutilating and masochistic decision of all was the one-child policy. Here’s the nauseating recipe: order women to stop giving birth (for the public good, of course) and decimate the population by hundreds of millions more. By 2050, the Chinese population is expected to be halved.
Then, to add insult to injury, print money to artificially depress the country’s currency, cheapen production, and enslave the population as factory workers to increase economic activity and offset the demographic decline.
The excess cash is then (as always) misallocated and flows into pointless real estate projects. Often homes, apartments and buildings are not even bought to live in. They are bought as stores of value – a place to seek shelter from the rapidly increasing money supply. This is how China’s “ghost towns” came to be; crumbling and decaying monuments to the unborn and aborted millions.
And so, between collapsing demographics, a bursting property bubble and a zero-COVID lockdown policy (another humdinger of the central planners), China finds itself on the precipice of a potentially crippling financial crisis.
The money printers must therefore go even hotter, stealing what little remains of the productivity of the people beneath them and causing ever more devastating catastrophe by inflating bubbles throughout the economy.
So, every single fatal error along the tortuous and winding path, a consequence of the nihilistic and ultimately fatal belief in central planning.
And this is where that road leads: banning bitcoin – a pure outgrowth of free internet and rejection of centralized power, an important tool to fight the coercion of fiat.
The central planners naturally reject this. Backed into a corner at this summer’s WEF event, Premier Li Keqiang made some noises about potentially easing restrictions, but was fiercely outspoken against stimulus injections and inflation:
“We will not resort to super stimulus or excessive money printing to achieve a high growth target. That will overdraw in the future.”
This promise is not only empty, it is actually a blatant and blatant lie for the following four reasons:
1. Money printing is not optional in a fiat system.
Over the past 20 years, China’s M2 money supply has inflated by an average of 14% per year. This means that the amount of money has doubled every 5 years! With a total debt/GDP ratio of over 300%, the interest rate mix requires more and more pressure. That’s how a debt-based fiat system works.
Money is circulated into the economy through the issuance of debt. Servicing the interest on this debt is only possible through, you guessed it: more money printing, i.e. debt creation.
Rinse, wash, repeat. It is the snake that eats its own tail.
And structurally there is no reversal or even tempering of this. The system is built on a one-way track where it is inflated or destroyed. Not that the central planners really mind destruction, except that…
2. …Stopping the printer causes revolution.
This goes double for a centralized power structure that depends on coercion through money printing to bend the population to its will. 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 very rare in China. But don’t worry, military tanks were quick to react, ready to quash any sign of disobedience in the echoes of Tiananmen Square.
Even worse for the central planners, a record number of home buyers are refusing to pay mortgages in over a hundred cities. The contagion started with Evergrande last year when it defaulted on a large part of its debt mountain of 300 billion dollars. The real estate sector, which accounts for 30% of economic output, is now under threat.
When things go wrong on this scale, social unrest is never far behind. The CCP knows this and has instructed the banks to bail out struggling property developers, aka more money printing.
3. China’s economy is dependent on exports.
Money printing 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 on the international markets. China has used this to great effect, consistently depressing the yuan to boost exports.
But why not just transition to a consumer-based economy and let the yuan strengthen? As discussed, China’s recently abandoned one-child policy is expected to halve its population over the next thirty years. There will not be enough of a population left to sustain this type of transition. Also, a consumer-based economy means letting people actually choose what they want. Something central planners cannot begin to fathom.
4. They have already banned bitcoin.
And finally, if money printing really isn’t on the table, why close the fire exits? China is one of the only countries that maintains a complete ban on bitcoin, including ownership, and has some of the strongest currency controls to prevent capital flight.
Of course, instead of bitcoin, China’s central planners are doubling down on the digital renminbi which gives them almost unlimited control over the population and further tightens the noose.
Sounds like money printing isn’t in the cards? (Rhetorical question).
The central planners are thus as always busy locking the gates, closing the hatches and blocking all possible escape routes.
Bitcoin, as the ultimate tool for self-determination, cannot be tolerated.
Just like the Great Wall of China, the digital firewall or the burning of treasure ships, master planners must isolate their victims and cut them off from any hope of salvation.
Then they can have their way with them, undisturbed.
The (central) plan is combustion through inflation. Because when things go wrong, just print a few more!
1. The fact that the death toll is unknown reflects the utter horror and utter chaos of the time.
This is a guest post by Andrew A. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.