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Relationships are another victim of the high time-preference infection created by fiat money.

This is an opinion editorial by Jimmy Song, a Bitcoin developer, educator and entrepreneur and programmer with over 20 years of experience.

Link to audio read of the article.

Our relationships have an unwelcome intruder, and that’s the government.

A society is a network of relationships between people. An edge should be bilateral and relationships should be direct, but unfortunately, in today’s fiat world, they are not. Most relationships have an authority in the middle and thus have a centralized controller. That’s not necessarily a bad thing. When it comes to justice or common standards, a third party that can figure something out in the midst of conflict is desirable. Centralization is a problem when it restricts the freedom of how people want to relate, especially when there’s no conflict.

I don’t need to argue here the importance of human relationships for a good and happy life. That is a given and everyone knows this instinctively. Even people who are very good at sustaining themselves need relationships as can be seen in the popular TV show “Alone.” Doing without human relationships is simply not a pleasant experience. No matter how introverted you may claim to be, you still have at least a few relationships that matter. Relationships are, in many ways, the thing that makes life interesting and worth living. The relationship network is civilization.

Unfortunately, our relationships, the edges on the network of civilization, have been debased. The unwelcome intrusion by authorities making bilateral relationships have created bureaucracy and added trusted third parties. I’ve written about this with respect to a specific relationship, that of marriage, but this applies to many other relationships. The quality of all relationships has been made much worse by the presence of fiat money.

We all instinctively feel this. Relationships seem especially shallow and there’s a high time-preference feel to them. Why do first impressions matter so much more these days? Why is it so difficult to connect with anyone at a deep level? Is life imitating Facebook where we know all sorts of surface-level details about people but little of the depth of their character? Do most people even have a desire to have deep relationships? There’s clearly something askew about relationships and this essay is an exploration into why.

High Time-Preference Relationships

One of the most obvious consequences of fiat money is that it incentivizes high time-preference behavior. Why save and plan for the future when the very money that we use is debased constantly? Government promises various forms of safety nets for the long term, so why not live for the present? Fiat money changes the incentives from long-term planning to short-term fun.

As a result, relationships are not built with the view of a long time-horizon. Working relationships, friendships and even family relations are entered into with a very short-term focus. In a fiat economy, people expect relationships to provide for the here and now. It’s no wonder, then, that global birth rates are going down everywhere. If you think about it, the parent-child relationship is a very long-term investment. 20-30 years is a long time to wait and in a fiat economy, such waiting just doesn’t make much sense.

Sadly, a short-term focus incentivizes exploitation. If you’re not in a relationship for the long term, why not burn bridges for your own benefit?

Further, the short-term nature of relationships makes them shallow. People are more concerned with having fun or getting access or making life convenient than with character, loyalty or reliability. High time-preference relationships are more volatile and require a lot more maintenance. Your relationship is only as good as your last interaction and if it wasn’t fun or interesting or feel-good in some way, it’s likely to end. Say some harsh truth and you’re likely to no longer have a relationship, for example.

In a fiat system, people have a higher time-preference and high time-preference people are not very disciplined. This naturally means that they are liable to act more emotionally and without much regard to the long term. Many people end up burning relationships on a regular basis because the investment in that relationship wasn’t much to begin with. This is especially true of people who don’t need anything from you. Many of these people are rent-seekers and they’re one of the blights to relationships in today’s society.

Fiat Reduces The Need For Reputation

Reputation used to be critical to making money. Being a good baker, cobbler or lawyer meant that you did a good job and treated your customers well. Having a bad reputation was a quick path to ruin.

Fiat money changed that.

Rent-seeking opportunities abound in a fiat money system and those require little to no reputation. Instead of being subject to market forces of supply and demand, rent-seekers need to only please the money printer. The only relationship that needs to be maintained is with whoever pays the salary. Of course, the payor of the salary usually has certain requirements and standards, but fulfilling requirements requires monitoring. The payor of the salary becomes the trusted third party in the bilateral relationship. Rent seekers will do the minimum they can to meet requirements. The third party’s presence and evaluation debases the relationship.

Contrast this with a market transaction. People that are seeking your business or service are much more likely to self-monitor and invest in the relationship. They have a much longer time-horizon because they are motivated by profit, not by satisfying a boss.

Fiat jobs have essentially made long-term consumer relationships almost unnecessary. Fiat has permeated other relationships and like most fiat things, has infected and debased them like cancer.

Implied Third Party

The most obvious fiat infection is in employer-employee relationships. The government regulates the relationship through employment laws. Salaries are taxed, certain benefits are required and both sides have to fulfill requirements of the government mandates. The government is a third party in the relationship and they add a lot of friction.

Monetarily, it’s a tax on the relationship, but the debasement is also in its depth. Instead of employers and employees creatively figuring out what would work for them, the government decides how the relationship has to be. Thus, much of the employer-employee relationships are standardized. There’s little innovation or competition because these aspects are the same everywhere.

This is why companies feel so cold and impersonal. Fiat companies are essentially extensions of government and they become rent-seeking which make them less focused on the long term. How many employees feel loyalty to a company anymore? It’s now expected that people leave a company and come back to get a promotion. Everyone is acting in high time-preference in that scenario as it costs both the company and the employee lots of money, time and energy that a good relationship would fix.

Even entrepreneurs are not exempt from government intervention as their relationships with their customers are regulated. The regulations are ostensibly for the purposes of protecting one of the parties, but end up keeping out innovation and creativity. If you wonder why some industries, like airlines, haven’t progressed, it’s because of these regulations and unfortunately that’s most of the economy now.

Politics Overtakes Everything

Relationships that have money at the center, like employer-employee and producer-consumer relationships are not the only relationships affected by fiat money. Because politics overtakes everything in a fiat-money economy, politics makes its unwelcome entry into even personal relationships.

The prize of getting to print money is such a big incentive that everyone fights over the right to do it for their own group’s benefit. Rent-seeking is a lot easier than serving the needs of the market, so political action takes on an enormous importance. Politics is by nature zero-sum, meaning that getting political benefits requires someone to lose. Thus, advancing the needs of your group is naturally going to conflict with the needs of another group.

The political arguments also become morally charged. Every argument for money ends up being a moral argument. There’s a huge incentive to claim victimhood so that the moral argument for money becomes more viable. The bigger your victim status, the bigger moral claim to newly printed money you have.

Relationships are now tinged with that victimhood status and ultimately, become monetary. The balance of payment in victimhood becomes a monetary payment through fiat money. Thus, your relationship with people in another political group has an implied third party in fiat money.

People within your group create an echo-chamber quality in it, where saying something politically in opposition to that group is liable to get you ostracized. After all, you’re costing them money! Fiat money reduces our relationships to the surface-level support of political ends. They feel shallow because they are.

Status Games

The political and rent-seeking nature of relationships means that status takes on a huge importance. You cannot make money in a fiat economy without climbing the status ladder. Unlike a market economy where innovation, creativity and useful goods and services make you money, in a fiat economy, having the right opinions, having the right political skills and having the ability to make a good first impression are what get you in with the money printer.

This is reflected in the relationships we have. People are seeking your vote or support within your in-group so they can climb the status ladder. Organizations become larger versions of middle school with all the backstabbing, gossiping and shallowness. Even worse, relationships get dropped the minute they are no longer politically expedient. Thus, they tend to not last very long.

Contrast this to market economies, where the goods and services matter much more. The goods and services ultimately make the impression, not the political abilities of the person selling them. Further, market transactions tend to be much longer-term. Switching costs are real and people tend to want higher quality over time. Relationships in a market economy cannot afford to be fly-by-night. You can’t just burn bridges without it costing you money.

Friendship

Sadly this political game is all too common in friend groups and makes them have a much higher time-preference. Status within the group is more important than any bilateral relationship due to the group’s political nature and that means people come and go in a friend group way more often. After all, who wants to be at the bottom of a status hierarchy when they can try their luck elsewhere?

One of the sad things I’ve seen over the years is the proliferation of MLM-type schemes on Facebook where people sell goods to their friends for some kickback. People are seeing friendships as a resource to make money and are perfectly happy to exploit them for that purpose. Such behavior debases the relationship as it forces money into the equation and most people are too polite to call such people out. The result is a lot of burned bridges and relationships that shatter because of the attempt at rent-seeking.

Authority-Subject Relationships

The oddity of democracy is that, at least nominally, the authorities need the consent of the governed. Consent of the governed is a good thing. But unfortunately, when fiat money enters the equation, we get deceitful governance.

We are now constantly being propagandized to believe that everything is going swell — or at least that the authorities are doing a good job — when in fact, they are not. The incentives for authorities are to get our vote because the prize of newly printed money is so huge. If they can get our vote through deception, rhetoric and propaganda even while isolating 49% of the population, they will. The truth is not fun to swallow, so the incentive is to lie and deceive. That’s not a great foundation for a relationship. The cynicism, skepticism and outright hostility toward the political system reflects this.

Bitcoin Fixes This

One of the remarkable things about my journey in Bitcoin has been the quality of relationships I’ve had the pleasure of developing. There are a lot of good and interesting people in this space and I’m fortunate to be friends with many of them.

The incentives of Bitcoin are very different from fiat money. What I’ve seen is that the high time-preference people will show themselves. Indeed, many people recently have burned bridges by condemning Bitcoin Maximalists and their harsh truths. I see these people as still being under fiat influence. The people that have stayed, though, are many and they are not liable to go away easily because there’s simply more character and loyalty in this group.

Bitcoin is different and changes the incentives in relationships. We care more deeply about the long term because we have savings and can plan for that. Relationships matter and weeding out the bad ones is just as important as keeping the good ones. Bitcoiners instinctively know this from the many affinity-scamming altcoiners in our space. The relationships that last are self-selecting. It’s a beautiful system of how relationships ought to be.

Let’s make relationships deep again.


Ten Reasons You’re Lonely

  1. Meeting your MMORPG friends in real life just wasn’t as interesting as you thought it’d be.
  2. Zoom calls sadly don’t satisfy your need for warm human contact.
  3. You think changing your Tinder profile is improving yourself.
  4. You insist on watching part 15 of an anime series when people come over.
  5. Eating take-out at the office to make partner status has been a bigger priority than dates.
  6. You keep telling your life story to anyone that shows even minimal listening skills.
  7. You only meet people at political rallies.
  8. You insist on having only friends that envy your success.
  9. It’s hard to bring dates over to your parents’ basement.
  10. You’re not happy unless you’re miserable.

This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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