Kicking the can down the road, versus capturing pieces of immutable scarcity. This is the choice that bitcoin brings to the table.
This is an opinion editorial by Maxx Mannheimer, a former sales account manager with a background in training and industrial-organizational psychology.
The economy can be thought of as a complex orchestra. Industry sectors are represented by the choir, strings, brass, woodwinds and percussion. These sectors are all working together as harmoniously as possible to create a seamless experience for the listeners and for themselves. Each individual utilizes the instruments available to them to add value to our collective experience.
In a classical orchestra we typically get to watch a conductor wave their arms about, which puts on quite a show for the audience, but also cues the individual players in the orchestra on when to play and how. Many orchestral musicians prefer the comfort of having a conductor’s cues. Others maintain that after enough practice they can play flawlessly without the vigorous hand waving. In Indonesian gamelan music there is no such conductor. All the participants play together.
The parallel I am drawing here is between a centrally-planned economy and a laissez-faire approach. Is it possible that the man in front of the audience isn’t as critical to the performance as his final bow may suggest? Egalitarians with a distaste for central planning might be inclined to say,“Yes.” I’m not here to insert my opinion into that argument, but rather to introduce the first metaphor as a supportive illustration for my second.
Hot potato and musical chairs work on a similar mechanic, but in reverse. In a game of hot potato the objective is to get the potato out of your hands as quickly as possible so that you’re not left holding it when the music stops. In a game of musical chairs the objective is to sit down into a seat as soon as the music stops.
Many of us have fallen for the illusion that we are incapable of fully understanding the current economic game of hot potato. The top players, of which there are few remaining, have developed very sophisticated moves and terminology to describe the manner in which they pass the potato from hand to hand. Quantitative easing and credit default swaps are excellent examples. As the game increases in dizzying verbal complexity the rest of us are simply spectators with minor bets on the outcome.
What I’m witnessing from U.S. president to U.S. president and from one Federal Reserve Board Chair to the next Fed Chair is undoubtedly a game of hot potato. They pass their responsibility for the potato with vigor, but surely they know one of them will be left holding the potato. The potato in the metaphor, of course, is debt. The United States national debt is currently nearing thirty trillion dollars ($30,000,000,000,000) and this is merely one of the many balance sheets involved in the mess. Writing or saying the word “trillion” just doesn’t have the same effect as looking at the zeros does it? Trying to actually visualize what one trillion of any physical object looks like can assist in understanding how hot this potato actually is. Unfortunately the player holding the potato when the music stops isn’t the only one who will have to deal with the absurdity of this situation. Every living human on this planet will bear the brunt of the crumbling tower of debt that our political and financial establishments have fabricated.
Each presidential administration and each political party points their finger towards their opposition, claiming that they are the root cause of our current dilemma. The truth is that they are all accountable for the circumstances we find ourselves in. Fans of either team will be biased in one way or another, but if one looks objectively at the legislative and fiscal history of the United States one finds tremendous fault on both sides of the aisle.
Some will disagree, but it is my opinion that hot potato is not fun anymore. The rules have become very convoluted, the number of players determining the outcome has gotten progressively smaller over time, and frankly I don’t care much for the original concept.
Thinking back to my playground years I recall situations in which most of the kids in the sandbox were playing a game that I wasn’t much interested in. I had options at the time. I was free to keep to myself and not interact with anyone, but that really defeated the point of going to the playground to begin with. I could begrudgingly play the game with others even though I didn’t enjoy it. Or I could initiate a new game and demonstrate to others why it was more fun than the previous.
Obviously, the global economy is managing risks far beyond what is considered to be the most “fun.” We are also considering living standards, individual liberty, life expectancy, infant mortality, warfare, and famine for starters.
For now we’ll just glance over the grim reality and refocus on fun. Today’s global economy maintains a state of affairs where a vast majority of the world is spectating a game which is not fun for them. A simple measure of this could be that of inequality tracked over time. As of right now, a very small percentage of the participants have realized that there is an alternative game available. That percentage does not encompass every bitcoin user, but only those bitcoin users who truly understand the potential of what they are holding.
21 million chairs have been set in a circle and the music is playing. Lucky for us we don’t have to wait for the music to stop before we sit down. In our current version of the game having a whole chair isn’t necessary to succeed, but having no access to a chair in the end would be a bad outcome. These chairs can be divided by 100 million and every player has a chance to have access to some portion of the chairs. Having more than one chair may afford you the ability to seat others that you care for, or you can hoard them for yourself. Such is the nature of the game.
Many people today have no idea how musical chairs works and are still fixated on the game of hot potato. Those are the no-coiners. Some people have a foot in each game wondering if they want to keep playing hot potato or if they want to dedicate themselves to musical chairs. Those are the “cryptocurrency” dabblers. Some people are well-focused on musical chairs, but are still jockeying to collect more chairs while risking the chairs they already have. Anyone trading bitcoin or trying to earn interest on it falls into that category. Naturally, using a cold wallet locks the chairs in so that no one else can sit on them. Those are the players who have already won.
Part of the fun is that as the international economic orchestra plays on, we don’t know exactly when the music will stop. There are those who will say that the music doesn’t have to stop. There are those who say that the hypothetical debt ceiling is infinite. They’ve never heard the music stop nor thought about how events might unfold if it does.
I made my choice regarding which game I wanted to play some time ago because I believe that the music will inevitably stop. It could have happened in 2008, but maybe we are getting an encore. There are no absolute limits to encores and technically the debt ceiling could be infinite, but does any rational human believe these things can go on forever?
At the moment it seems the conductor is pushing harder and harder, flailing and sweating. Musicians are falling out of their chairs from exhaustion and the semblance of harmony is spiraling into an avant-garde nightmare. Labor shortages, commodity fluctuations, extreme speculation, price inflation and overwhelming anxiety are resulting from a global system pushed to the brink.
Who else is looking forward to some peace and quiet?
This is a guest post by Maxx Mannheimer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.