‘Never let a good crisis go to waste’
The words are attributed to Winston Churchill, Britain’s celebrated Prime Minister, towards the end of the Second World War. Churchill was working towards the creation of the United Nations, with the aim of avoiding repeating the mistakes that had been made after the First World War.
We might imagine the same idea in the minds of today’s leaders, with altogether less altruistic motives. The coronavirus crisis has also presented opportunities for reform and change: of consumer culture, of environmental threats, of unhealthy work habits and a lack of work/life balance.
It has also offered unprecedented opportunities for corruption and self-enrichment of those in positions of power and responsibility – and they have not let a good crisis go to waste.
Bitcoin, an asset launched as a solution to the last financial crisis (its first block contains a reference to the instability of the banking system), offers a rare opportunity to vote with your money and opt out of the sleaze, scandal and rigged game that is today’s financial and political landscape.
The Cost of the Crisis
“Never let a good crisis go to waste.” Those same words were used, over 60 years later than Churchill and in very different circumstances, by Rahm Emanuel. As Obama’s Chief of Staff, Emanuel was talking about the opportunity the Global Financial Crisis offered for global reform.
It didn’t happen. While changes were made that would protect the financial sector from its own worst excesses, and the population from the harshest doses of financial radiation that might have resulted, they amounted to little more than tinkering around the edges.
Twelve years after the 2008 Global Financial Crisis, nations were still in a poor state to pay for the enormous economic damage inflicted by the virus and the measures taken to minimise the death toll. There were no national savings to deploy. Interest rates were already at rock bottom. The only response left was Quantitative Easing – money printing – on an incomprehensible scale, to prevent the financial and social devastation that would otherwise have resulted.
Around a quarter of all US dollars in existence were created in 2020 alone. It’s not hard to see the effect this money has had. Analysts talk about a ‘K-shaped recovery’: an uneven recovery after a recession. In this case, QE has inflated some asset classes – including stocks and real estate – to all-time highs, while employment and other areas of the economy languish. Those who could afford to buy assets a year ago have benefited handsomely from the crisis. Those who could not, perhaps burning their savings in the time they were out of work, are now watching those assets soaring even further out of reach.
This inequality and injustice has been compounded by the sleaze and scandal that have become so routine they are unremarkable. Politicians have not let the crisis go to waste either. In the UK, lucrative contracts for personal protective equipment (PPE), ventilators and more have gone to companies with close financial and personal links to those who granted them. In the US, many billions of dollars in contracts similarly went to those with close links to the administration.
Such procurement scandals and wider secrecy and data manipulation around COVID figures are common around the world. Where they have become public, they are typically dismissed or swept under the carpet with the convenient catch-all excuse that accountability and transparency are unaffordable luxuries in the urgency of a pandemic. Truth is easy to denounce as fake news. Politicians caught in wrongdoing no longer bother to resign, or even go through proper processes. A simple denial, unsupported by fact, is enough.
The net result? When the dust settles, inequality will have increased. Those who have the money and the right connections will have grown even wealthier from the crisis, while those without them will have lost their jobs, savings and future employment prospects, if not their lives. Mistrust of those in power will be at an all-time high.
There’s a saying in the Talmud: ‘He whose coin is current in the country is king.’ It’s understandable that money has become as corrupt as those who manage and spend it on our behalf.
Money has become irrevocably politicised. Central banks might be independent in theory, but public spending and borrowing lie in the hands of politicians. One of the reasons the 2008 financial crisis was so severe was that governments had continued to borrow in the good times, instead of paying down the national debt, curtailing their need to borrow when they really needed it and forcing the central banks to step in with untested measures.
Bitcoin, the grassroots activists’ response to the crisis, is completely apolitical. Unlike state-backed fiat money, its supply isn’t influenced by politicians or controlled by central and commercial banks. Its supply and operation are backed by maths. There can be no QE for bitcoin, and its use does not require trust in any third party – bank, government or anyone else. There will only ever be a fixed amount of 21 million BTC, making it a radical alternative to inflationary dollars, pounds and euros.
At a time when the state money printers are running 24/7, and the cash streaming out of them is being so routinely misspent, holding bitcoin is an inherently subversive act, a vote against the corrupt and short-termist status quo. No wonder that the Bank of America, Natwest in the UK and other major players are speaking out against bitcoin or even stating they will not do business with companies that accept crypto.
Bitcoin is a threat. Not necessarily to state-issued money itself; state-backed currencies are here to stay, if for no other reason than the only way to pay taxes. But when the public and big corporations start flocking to crypto because it’s more trustworthy and transparent than any state-backed currency in the world, you know that those charged with issuing and safeguarding it must be starting to feel uncomfortable.
For the average citizen, it’s just about the only insurance policy fit for purpose against the possibility of currency devaluation on a scale not seen for many decades.