Just like the tragic figures of Greek mythology, China has a long and legendary history of snatching defeat from the jaws of victory. Its ruling class, in particular, has always had an insatiable appetite for self-flagellation. The bitcoin ban is just the final chapter in this sad and destructive story.
Blessed with an abundance of natural resources, a huge population, and full access to the South and East China Seas along its 9,000-mile coastline, China was perfectly prepared to be the empire of all ages.
And for nearly 2,000 years it has dominated the region.
Long before the British and the Spaniards, China built entire fleets of treasure ships capable of crossing the farthest corners of the earth, capable of reaching even the New World, centuries before Columbus took to the sea.
If things had turned out differently, America might as well have been subject to the emperor instead of the king, and Mandarin would be the predominant language of the world, not English.
But this was not allowed.
Driven by jealousy, fear and resentment towards their budding and prosperous merchant class, the ruling elite – aka the central planners – ordered all ships to be set on fire. An act of pure self-immolation apparently.
This has blocked the Chinese people, unable to explore the outside world, and left them isolated and vulnerable to the horrors of the opium wars that colonial Britain brought to their shores.
The next cabal of central planners to wreak havoc and destroy was the Communists under the same master planner, Chairman Mao. And again, the target of their wrath was an emerging middle class. This time the productive farmers of the Chinese countryside were the sacrificial lambs to be slaughtered.
The Red Guards, the group of fanatical Mao supporters, marched across China, zealously purging the so-called “Five Black Categories”. These included: wealthy peasants, landowners, counter-revolutionaries, right-wingers and heretics of all kinds.
With society uprooted, millions of peasants were then collectivized and forced into labor camps to produce crops. Of course, hunger soon followed and millions of people died. Unauthorized possession of a single grain of rice was sufficient justification for the execution of entire families.
This living nightmare has never been fully digested.
Indeed, with the dawn of the internet, central planners were back in the game. Paranoid for fear that their power might be challenged, a digital firewall has been erected. Just like the Great Wall of China centuries ago, this wall was intended to keep its population captive, docile and safe from any potentially corrupting external influences. Unwanted speech is censored and past crimes cannot be discussed.
How else could a society prostrate itself at the altar of a genocidal maniac, the exterminator of its ancestors? To this day, Mao is worshiped as a god. And so, the faded memory of these atrocities and even the estimated 50-100 million deaths1 they were not enough to put an end to the vicious circle.
No, central planners were just getting started.
That’s right, the Chinese butchers were preparing for the next amputation.
Perhaps the most devastating, self-mutilating and masochistic decision of all was the one-child policy. Here’s the disgusting recipe: Commanding women to stop having children (for the common good, of course) and decimate the population by a few hundred million more. By 2050, China’s population is expected to halve.
Then, to add humiliation to the damage, print money to artificially depress the country’s currency, make production cheaper and enslave the population as workers, in order to revive economic activity and compensate for the demographic slowdown.
The excess money is then (as always) misallocated and pours into useless real estate projects. Often houses, 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 inflationary supply of money. This is how China’s “ghost towns” were born; crumbling and decaying monuments to the millions of unborn and aborted.
And so, amid collapsing demographics, a bursting housing bubble and a zero-COVID (another humminger for central planners) policy, China finds itself on the brink of a potentially crippling financial crisis.
Money printers must therefore be even hotter, stealing what little is left of people’s productivity from beneath them and causing ever more devastating calamities by blowing bubbles across the economy.
Hence, every fatal mistake along the tortuous and tortuous path, a consequence of the nihilistic and ultimately deadly belief in central planning.
And this is where that path leads: the ban on bitcoin, a pure consequence of the free Internet, and the rejection of centralized power, an essential tool for fighting fiat coercion.
Central planners obviously deny this. When cornered at this summer’s WEF event, Premier Li Keqiang made some rumors about the potential easing of lockdowns, but was vehemently outspoken against stimulus injections and inflation:
“We will not resort to large incentives or excessive money printing to achieve a high growth goal. This will prevail over the future “.
This promise isn’t just empty, it’s actually a blatant and obvious 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 swelled by an average of 14% per year. This means that the money supply has doubled every 5 years! With a total debt-to-GDP ratio of over 300%, compounding interest requires more and more printouts. This is how a debt-based fiat system works.
Money is circulated in the economy through the issuance of debt. Serving interest on this debt is only possible through, you guessed it: more money printing, that is, creating debt.
Rinse, wash, repeat. It is the snake that eats its own tail.
And structurally, there’s no way to reverse or even temper this. The system is built on a one-way track where it inflates or collapses. Not that central planners really care about the devastation, except …
2.… Stopping the printer causes the revolution.
This is double for a centralized power structure that relies heavily on coercion through the printing of money to bend the population to its will. It is no coincidence that paper money was first developed by Chinese central planners.
The recent liquidity crisis has already led to bank runs and even demonstrations, which is extremely rare in China. But not to worry, the military tanks responded promptly, ready to suppress any sign of insubordination in the echoes of Tiananmen Square.
Even worse for central planners, a record number of homebuyers turn down mortgage payments in over a hundred cities. The contagion began with Evergrande last year, when it defaulted on much of its $ 300 billion debt mountain. 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 troubled real estate developers – more printing money.
3. The Chinese economy depends on exports.
Printing money is notoriously a race to the bottom. Those who devalue the currency faster have a competitive advantage. This is because domestic goods become relatively cheaper on international markets. China has used this to great effect, constantly pushing the yuan lower to boost its exports.
But why not switch to a consumption-based economy and let the yuan strengthen? As discussed, China’s recently abandoned one-child policy is expected to halve the population within the next thirty years. There won’t be enough population left to support this kind of transition. Furthermore, a consumption-based economy means letting people actually choose what they want. Something central planners fail to understand.
4. They have already banned bitcoin.
And finally, if money printing isn’t really on the table, why close the fire exits? China is one of the few countries that maintains a total ban on bitcoin, including ownership, and has some of the strongest currency controls to prevent capital flight.
Instead of bitcoin, China’s central planners are obviously doubling down on the digital renminbi which gives them almost unlimited control over the population and tightens the noose further.
Does it seem to you that money printing is not in the cards? (Rhetorical question).
The central planners are therefore, as always, committed to closing the gates, closing the doors and sealing all possible escape routes.
Bitcoin, as the ultimate tool for self-determination, cannot be tolerated.
Just like the Great Wall, the digital firewall or the burning of treasure ships, central planners must isolate their victims and cut them off from any hope of salvation.
So they can have their way with them, undisturbed.
The (central) plan is incineration through inflation. Because when things go wrong, print some more!
1. The fact that the death toll is unknown reflects the complete horror and utter chaos of the times.
This is a guest post by Andrew Axelrod. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.