Reading Broken Money by Lyn Alden for the first time. This passage that links inflation and war’s likelihood is so important and close to the heart of why I care about Bitcoin.
“The ability to debase money contributes to the likelihood of war and several other forms of damaged productivity occurring in the first place. The temptation for a ruler to debase coinage is too great to overcome, because it’s usually the path of least resistance when faced with a problem. If the king knows that paying for a war by outright raising taxes would likely lead to revolution, but that paying for the war via gradual debasement of coinage will not, he can justify paying for his war by relying on that second method. If he and his potential war opponent were both stuck with the first method of paying for a war with extra taxes rather than debasement, the war might not happen because their subjects might revolt if it did. The costs of the war would be more transparent and unpopular right away. In contrast to this, the ability to debase coinage to pay for a war allows the war to happen first and the costs to be partially delayed, which increases the probability of war happening and increases the scale to which it may occur. If debasement can occur, it eventually will occur for any number of reasons. The possibility for debasement exists, always and everywhere and invitingly so, as something a government can turn to whenever it can’t spend transparently on what it wants to.
Aside from examples of unusually corrupt or mentally ill rulers, a king does not generally wake up one day and whimsically decide to devalue his realm’s coinage with cheaper metal for no reason. War, plagues, and other destroyers of productivity are indeed at the root of why kings usually end up debasing their money. To remain in power, rulers seek to strengthen their political position, placate their subjects, and smooth over problems that inevitably arise throughout their reign. Currency devaluation is a method that a king can resort to so that he can make increased payments without having to increase taxes for those payments, and therefore the cost instead gets pushed, over time, onto those who accept the newly devalued coins at their old face value despite not having the same metal content or supply scarcity that they used to have.”
It is a bit long and taken out of its full context. I seek ways to make this easier to understand. Currently it requires a fair bit of explaining to communicate it well enough.
#philosophy
