Broken Money

“ It can be a challenge to save money even in the most stable monetary jurisdictions, and if someone happens to be born in the 'wrong' jurisdiction, it's an incredible uphill battle.

“ It can be a challenge to save money even in the most stable monetary jurisdictions, and if someone happens to be born in the 'wrong' jurisdiction, it's an incredible uphill battle. ” e.style.display='none');if(typeof getContentsSections==='function')setTimeout(getContentsSections,50)" /> The global money problem is staggering. In 2022, Türkiye hit 85% inflation; Argentina exceeded 100%. Egypt halved its currency twice in six years, wiping out savings overnight. Lebanon froze bank deposits so severely that citizens literally robbed banks to reclaim their own money. Even in wealthy nations, over $18 trillion in bonds offered negative yields at the peak — people paid for the privilege of lending to governments. There are roughly 160 fiat currencies, each with a monopoly in its own jurisdiction and little acceptance outside it. The global financial order is practically a barter system. A handful of top currencies lose value slowly; most of the rest devalue sharply and often. The Federal Reserve's twelve-person committee sets monetary conditions for 330 million Americans and billions abroad. TAKEAWAY 2

“ Shell beads, and commodity monies more broadly, serve as nature's decentralized ledger. ” e.style.display='none');if(typeof getContentsSections==='function')setTimeout(getContentsSections,50)" /> Alden's unifying insight is simple. Both commodity money (gold, shells) and credit money (IOUs, bank deposits) are just different ways of maintaining a ledger. With commodity money, nature controls the ledger through the physical scarcity of the material — nobody can cheat. With credit money, human institutions control the ledger — and human institutions can and do debase it. With open-source cryptocurrency, users collectively control the ledger through code and cryptography. This framework, which Alden calls the ledger theory of money, reconciles the long-running conflict between the commodity theory of money (Austrian school) and the credit theory (Chartalists, MMT). Both theories are partially right because both describe different methods of maintaining a ledger, with different administrators and different failure modes. TAKEAWAY 3

“ If a money is not selected wisely within a society, it only takes a small number of individuals to break free from their society's shared delusion to realize that its money isn't scarce, and make a lot more of it to extract value from everyone else. ” e.style.display='none');if(typeof getContentsSections==='function')setTimeout(getContentsSections,50)" /> Technology ruthlessly filters weak monies. The stock-to-flow ratio — existing supply divided by annual new production — determines whether a commodity can serve as money long-term. Gold's ratio is roughly 67, meaning it would take 67 years of mining to double existing supply. That's the highest of any commodity. Shell beads survived thousands of years until industrial drills made them easy to mass-produce.…