In my circles, the term “fiat currency” is thrown around a lot, the idea that the dollar, euro, pound and other widely used media of exchange are created according the whims of their respective governments. This would be in contrast to a hard commodity money like gold or silver or even oil wherein the paper (or electronic) representation of wealth corresponded to a finite supply of a scarce resource. In that case, if you had x digital dollars in your account it would mean you had a claim on y ounces of gold or z barrels of oil.
Of course, people could drill for more oil, but oil is energy, so even though your claim on the world’s energy might shrink proportionally, it would still remain constant in terms of the amount of power available to you. Likewise, people could mine more gold, but gold is scarce, expensive and difficult to mine, so the extra gold coming into use would have only a negligible effect on your wealth in the short and medium term.
But in our present situation of money on a fiat standard, wherein a bank can issue it into existence via new loans, or a central bank can simply add zeroes to a bank’s reserves, there is no tether to a useful (or scarce and hard to produce) commodity. In this case, your labor and savings can be (and is) diluted with the touch of a keyboard.
For example, if there are one trillion dollars in existence, and you own one million, you have one millionth of the country’s available wealth. Should the government print another trillion, you now have one two-millionth of the wealth. But printing (or digitally adding) another trillion dollars into circulation does not increase the world’s energy supply or useful goods, thereby growing the pie. The pie is exactly the same size, only now your claim is to a smaller slice. The wealth has simply been reapportioned away from, for example, wage workers and savers and toward asset holders (scarce real estate, artworks, gold, etc.)
Put differently, fiat-currency-printing governments are legalized counterfeiters. They dilute the work and savings (stored work) of their citizens. If you make $25 an hour, and a house in your neighborhood costs $400K, it would take you 16,000 hours to pay for a house. If that house goes up to $800K, you’d need to make $50 an hour to keep pace. But while your wages might go up somewhat as the money supply expands, if they don’t go up as fast as the house appreciates, you will have to work more hours to afford it. Your labor in that case has been diluted, and your wealth redistributed to whoever already owns that house.
And this is made possible by fiat — governments deciding to increase the money supply for whatever reason they deem necessary or expedient, e.g., to “save the banking system,” “stimulate the economy,” “make up for the demand shortage after they closed down society for a year.” They can simply add zeroes to a spreadsheet with a keystroke, redistributing wealth from one set of people to another according to their whims.
. . .
As unfair as surreptitious wealth redistribution via fiat is, I want to bring up a parallel and perhaps more pernicious process in our midst: fiat morality. Many people — and I would argue most of our institutions — subscribe to a moral framework wherein it’s presumed the right thing to do is provide the greatest good for the greatest number.
This is the moral philosophy of utilitarianism, and it’s easy to see its appeal. If I can help 10 people at the expense of one, I’m in the black. If I can sacrifice the desires of a few to satisfy the many, this is a net greater good, according to this philosophy. It’s as though I have a spreadsheet of harms and goods, debits and credits so to speak, and as long as I’m maximizing the credits and minimizing the debits to the greatest extent practicable, I’m doing good.
The problems with utilitarianism are many — not only are humans not very good at predicting future “greater good,” especially the second and third order effects in the medium and longer term future, but they are also prone to many self-serving biases about what constitutes the good and vice-versa. I want to focus on the second problem here.
Let’s imagine I’m a utilitarian, desiring the greatest good for the greatest number, so I decide to run for president because of course we need a leader who prioritizes this very philosophy. I believe that if I win the election, a lot of NET GOOD will come from that, and if I lose, a lot of NET BAD will come from my opponent who believes people should have maximum freedom, within the law, irrespective of the consequences.
Unfortunately for me, my opponent is way up in the polls. One of my advisors informs me he has a whistleblower from my opponent’s old company who’s willing to go public with his many indiscretions. This is great news for my campaign and of course for the country which is now in grave danger of NET BAD happening.
We meet with the whistleblower who tells me a story that, via an odd twist of fate, I know for a fact is a lie. I can’t prove this, and no one else knows, but I have now ascertained with certainty that our whistleblower is willing to lie. Still, she is, to those not in the know, credible and compelling, and she has cohorts willing to corroborate her story (let’s imagine I also know they are dishonest.) Should I champion the whistleblower’s story to damage my opponent even though I know she is lying?
I am about to decline, but my advisor astutely reminds me of the following: While lying is bad, the NET GOOD for billions around the world from my winning far outweighs the harm caused to my opponent being publicly smeared. Not only is it not wrong to lie in this case, I have a moral obligation to do so.
The whistleblower’s revelations are a resounding success, and now I am more or less dead-even in the polls. Unfortunately, I’ve gotten wind that my opponent has his own whistleblower who can show that my whistleblower was in fact lying, and can prove that I knew she was lying at the time I championed her. This revelation would be fatal to my campaign, so it’s imperative his whistleblower not be able to make it to the courthouse the following day to testify.
Of course, there’s not much I can do in this case, but my advisor tells me he has a man in the whistleblower’s local area who can “make this go away.” Of course, contract killing an honest and innocent whistleblower is a terrible NET BAD, but given how much my winning this presidency would redound to the NET GOOD, surely the sacrifice of a single person is not only justified, but morally imperative. We have the whistleblower assassinated.
I win the presidency, but there are other obstacles to my doing the greatest good for the greatest number. Congress is stubborn about passing my important net-zero environmental agenda that’s crucial to the survival of humanity. Recalcitrant anti-vaxxers are not letting the country get to herd immunity. Free-speech zealots are suing under the First Amendment to allow pernicious disinformation, all of which are preventing NET GOOD and promoting NET BAD.
I start jailing my political opponents, assassinating the worst of them, I order lockdowns, mandatory injections, impose strict carbon limits to reduce travel and meat consumption. I make it a crime to say anything that could lead people to be vaccine hesitant. All of these measures are for the NET GOOD.
. . .
The example I’ve outlined is admittedly extreme, but the principles advocated therein are actually quite ordinary. We really did lock people in their homes to “stop the spread” and we really did cost people their livelihoods to “increase vaccine uptake.” We really did invade Iraq (and kill a million people) to “keep us safe” from the alleged WMD. It’s quite easy to add NET GOODs or NET BADs to the spreadsheet in order to manipulate the moral calculi under a utilitarian framework, just as the fiat currency issuers can add zeroes to a balance sheet.
You don’t want to take the injection, and you now realize it doesn’t even stop the spread? Let’s add “taking up ICU beds” to the moral harms column and now we can justify our mandates again! By fiat, we can command you to do or abstain from doing virtually anything.
. . .
What’s the alternative? People are so steeped in this mode of thinking they can’t imagine there’s some other way to manage public policy (or even private decision-making.)
The alternative is to act out of principle.
Do you remember “Thou Shalt Not Kill?” That would be the answer to “Do I assassinate my political opponent if doing so accrues to the NET GOOD?”
Do you remember: “Thou Shalt Not Lie?” That would be the answer to whether to promote the fake whistleblower.
Do you remember:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
That would be the answer to whether you can pass laws against “disinformation” that might reduce mRNA injection uptake.
Do you remember:
The voluntary consent of the human subject is absolutely essential.
That would be the answer to whether you can coerce people into taking medicine they don’t want by barring them from public spaces and threatening their jobs.
The reason civil, constitutional and human rights exist is that people will always be able to justify their preferences as accruing to the greater good. They will always be able to manipulate the morality spreadsheet according to their whims. Rights stand as red lines that cannot be crossed, principles that cannot be violated, irrespective of your shoddy first-order spreadsheet math.
The alternative to a fiat currency is a hard commodity money like gold or bitcoin the supply of which cannot be increased at the whims of the state. The alternative to fiat morality is firm moral principles like the rights embedded in the constitution that are inviolable to the agendas of the powerful. A government of laws, not men.