Self-sovereignty, not self-sufficiency

Whether at family gatherings, at work or during meetups with friends, one topic currently dominates almost every conversation: the coronavirus. Since the beginning of the year, COVID-19, as the lung disease is officially called, has spread to more and more places on our planet. While some countries have reacted rather cautiously in containing the virus (for example Germany), other countries such as Switzerland have taken more drastic measures. In Switzerland, all football matches have been canceled. The situation is different in Germany, where football is still played on the pitch and the stadiums are still full.

In the wake of these mainly psychological shock reactions to coronavirus, voices are being raised all around the world announcing “peak globalization”. In their pleas, these voices advocate for a reduction in international interaction, global trade, and economic interdependency. The coronavirus, as a perfect example, would show us the limits of an ever more globalized world. This is why globalization, our modern-day megalomania must be stopped, as it has blinded us to monumental problems such as climate change and societal fragility.

Incompatible with mass societies

Thus, terms such as self-sufficiency, autarchy, and localism are currently very popular. Even if intentions and wishful thinking behind these concepts are to be acknowledged, one must be warned of any effective implementation of such ideas. What sounds beautiful, romantic and idyllic ultimately means subsistence farming, isolationism and protectionism. The only way our present-day mass societies can function in a reasonably bearable way is relying on cooperation on a global scale. Increased self-sufficient self-organization would fail due to the diverse demands and needs of our motley, multicultural mass societies and would result in a gradual impoverishment. 

Protectionism almost always falls on fertile ground in today’s atomized mass society. It is the promise to protect and promote the “own” interests of the “we-collective” against the ones of foreigners, and yet “helps” “the economy”. This misconception is age-old, is a natural tendency of humans, which is why it reappears again and again, especially when this misconception is apparently confirmed by events such as a pandemic. But protectionism is always an economically counterproductive domestic policy. Of course, the latter is less devastating than foreign policy motivated by domestic policy, which is bluntly called. war. Nonetheless, protectionist “trade wars” and effective wars are not too far apart, as French economist Frédéric Bastiat emphasized as early as in the 19th century: If not goods, then soldiers will soon be crossing borders. 

It’s money creation, stupid

Today hardly anyone recognizes: The fact that the international division of labor and globalization are artificially inflated and have a disproportionately unfair effect on some sections of the population is due to our global monetary system, i.e. the monetary interventions therein. Today, we have a fiat currency system in which different national currencies compete against each other in a constant race to the bottom of devaluing one’s currency. Most states, with a few exceptions, are endeavoring to keep their currencies competitive (that is the rationale behind it) against the leading reserve currency, the US dollar. Because the US dollar has this currency status, the US manages to capitalize on this “privilège exorbitant” and export its currency to the whole world to satisfy its own consumption needs. This fact is also explained by the US’s steadily growing trade deficit.

Nations around the world try to be as attractive as possible for these immense dollar reserves exported to the world, which is why the ongoing devaluation of their currency is not to stop anytime soon. China, in particular, has perfected this strategy over the last few decades as an emerging market and has kept its currency, the Renminbi, artificially low. As a logical consequence, a great deal of the production structure and many supply chain bases have been built up in the country of the middle – more than would have effectively been the case in a globalized division of labor without constant money devaluation by continuous money creation.

Individual self-sovereignty

As an individual, you are at the mercy of governments’, central banks’ and politicians’ money devaluation policies. Interestingly, a new technology was born a little more than ten years ago. It is said to be the technological invention of hard money – money with which no single party can engage in monetary cheating. The issuance of new monetary units is algorithmically determined and distributed among a multitude of actors. Economic incentives ensure that these actors have merely no incentives to disregard the algorithms and thwart the promise of hard money. 

This invention is called Bitcoin, and over the past decade, it has proven to be an effective technology for individual hoarding. However, Bitcoin users don’t just have to blindly trust a network of computers, but can personally track every transaction and thus every event within the Bitcoin network. All it takes is a little technical know-how, some software, as well as hardware, and you are ready to run your own full Bitcoin node becoming a validating force within the Bitcoin network. 

What sounds like an insurmountable task for many is possible thanks to tutorials and the help of previous Bitcoiners. In the future, the hurdles to running your own full node are likely to continue to fall and the ability to take control of your own self-sovereignty over money and finances should become ever more straightforward. Bitcoin not only gives you the freedom to save and hoard regardless of the current financial system, but also the freedom to transact and make payments in a pseudonymous, confidential way that acknowledges the value of privacy.

So after all, something can actually be done against this artificial inflation and institutionalized money creation hurting globalization and its perception in the eyes of many. But the right way forward is not to retreat into self-sufficiency, as envisaged by states and politicians, as well as some fearfully ignorant citizens. Rather, it is to open up to a global, censorship-resistant, border-crossing, open and neutral financial network that allows the best possible self-sovereignty.

This article was made possible with the kind support of Bitalo, the first crypto exchange in Germany completely regulated by the BaFIN (https://bitalo.de).

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