This article is a guest post by the member of our expert community, Joel Dietz.
On Friday secret tapes of correspondence from Goldman Sachs and the Federal Reserve were released. The truth is not pretty and it may be even more shocking than you think
Observers of the Fed have long known that the Reserve is extremely secretive. What they haven't known is what it is secretive about. Much of their work is guesswork. Now we finally know what is actually going inside the Fed.
For those who don't know, the Federal Reserve was set up as a private entity in the early part of the 20th century, a sort of superbank to regulate America's money supply. It is supposed to oversee the big banks, including those that were "too big to fail," but these disclosures displayed that it's been doing just the opposite.
Something like a Randian soap opera, the Federal Reserve apparently operates on a consensus model where anyone who disagrees with what currently is going on, is pushed aside. If you agree, you may get promoted and go off to work for a better salary in a big bank. If you ever disagree or suggest that the Federal Reserve should perform its job, you are likely to be unceremoniously fired.
In one curious case, some upstart who thought that Goldman Sachs should be held accountable for its many conflicts of interest was one of those who "didn't fit in," and was summarily dismissed. The difference was that she disappeared with many privately taken recordings of what really happens inside the Fed. Which is, apparently, a whole lot of nothing at great cost to the American taxpayer.
Unsurprisingly, this means that the banks they are supposed to be regulating can do whatever they want, since there is no whistleblowing, there isn't even a whistle to blow. Whatever it's original purpose for the United States financial system, Federal Reserve as an institution has gone belly up with no end in sight. It's hard to imagine any possibility for reform for an organization that not only denies anything is wrong, but also refuses to open up any sort of records to the public eye.
Enter Bitcoin. Unlike the Fed, which has the ability to create as much money at any point to "fix" crises that they may have had a hand in creating, the monetary supply in Bitcoin is fixed in quantity. It means that it can't be tampered with or made to serve special interests. Unlike the U.S. Government, which spends money to secure gold in vaults and employs people who are supposed to oversee these investment banks, Bitcoin is secured by a system of "miners," who receive bits of Bitcoin for their participation in securing the network.
With these revelations, Bitcoin seems like a far more robust and democratic system than what we currently have. It's also worth mentioning that Bitcoin transactions are auditable and its governance is transparent, unlike the Federal Reserve which will not even release records to elected members of congress. Perhaps the best thing for old moribund institutions is to simply fade away into insignificance. Is the writing on the wall for the Fed? At the very least we can expect more people to discover alternative forms of money as they realize what is happening every day in the organizations that are supposed to protect human freedom. They are sitting on their hands while other people run off with your money.
Bitcoin is definitely a partial answer, but as Hal Finney pointed out, it's not just technology that solves these problems. We need to educate people as well.
As Hal stated many years ago:
If we want freedom and privacy, we must persuade others that these are worth having. There are no shortcuts. Withdrawing into technology is like pulling the blankets over your head. It feels good for a while, until reality catches up.
If Bitcoin is the solution the world needs, it also needs people to wake up to the charade that is being played in the halls of power. It needs powerful messaging and education around how Bitcoin can help solve some of the problems that we currently have. It needs, among other things, educational tools like the Bitcoin Comic, a project that we are tirelessly promoting at Swarm (www.swarm.co/comiccoin).
There are old institutions that are decaying. That's fine, because at the same time there is a new world being born on the blockchain. Let's make sure that people find out about it.
Did you enjoy this article? You may also be interested in reading these ones:
- Op-Ed: “Obituary” for Hal Finney
- How Bitcoin can Win the Media War
- What happens after the crypto-revolution?