My heart goes out to everyone affected by the protests.
I’d love nothing more than to see better living conditions, more opportunity, and, plainly, more peace and harmony.
I don’t endorse violence or destruction.
But while those acts dominate the headlines, perhaps there’s something else worth considering:
What are the majority of peaceful protesters so upset about?
My heart goes out to them as well, most of whom are peaceful and genuinely want a better life, like we all do.
We can disagree about how to get there, but one of the things traveling and living abroad has taught me is, we’re mostly all the same and want the same things in life.
So, is it really fair to say this is all just “a bunch of angry, lazy socialists who don’t want to work”?
Perhaps there’s something more.
If you talk to the locals, as I have in France earlier this month, and now Italy where I am today, most share the same concerns: deteriorating education, high rents, high fuel/gas prices, and overall cost cost of living due to inflation.
One girl in France put it particularly well to me:
“Our education is deteriorating while the government is busy funding wars.”
It’s sad to see people feel that the system no longer works for them.
And this isn’t unique to Europe. You can feel it, hear it, and see it in the United States, too.
What if many of these problems are connected by a common thread: money?
Our monetary system has profound consequences for how wealth is distributed and long term, how people behave.
Expanding the money supply increases the cost of living.
Those who hold cash and depend on wages struggle to keep up, while people who own scarce assets may benefit from rising prices.
Americans love to dunk on Europeans for being “socialist” but perhaps there’s nothing more socialist about a society than having the money by centrally controlled and influenced by government.
That happens around the world, as every major country is on a “fiat” standard, which means, money issued by the government that has no intrinsic value.
Over time, the structure of the monetary system influences who gets ahead, who falls behind, and how much economic pressure ordinary people experience.
These pressures can feed social unrest, particularly when people lose faith that hard work will lead to a better life.
We’ve seen versions of this throughout history and we’re seeing it now.
Ray Dalio has studied the rise and decline of empires and monetary systems.
Neil Howe’s The Fourth Turning explores recurring generational patterns.
The concept of “elite overproduction” from Peter Turchin (popularized by Prof Jiang) examines what happens when competition for status and opportunity intensifies.
These cycles happen predictability, like clockwork and have been for centuries.
The issue is they are the long arch of history. Although predictable, they happen but once in a lifetime.
The older generation passes away and the new one inherits a broken system while never experiencing the lessons from the past.
By then, the reset happened so long ago that the system doesn't work anymore.
Here’s what I think about daily and have been pondering since I began studying monetary history.
History suggests that major systems often don’t change until the pressure becomes impossible to ignore.
Sometimes that change is peaceful. Studying the work of Dalio taught me most of the time it isn’t.
People say I’m cavalier about this; it’s the opposite.
I’m extremely worried that it gets worse, far worse, before it gets better.
Economic crises, political upheaval, and social conflict can reinforce one another before a new order emerges.
The unsettling thing is how slowly these patterns develop, and how quickly they can accelerate once they reach a breaking point.
As they say, Gradually, then Suddenly.
I hope we can learn from history before things get worse. But it seems we shouldn’t rely on mere hope alone as a strategy.
The question is whether we can change the incentives that produce these outcomes.
I’ve explored this in my series The Future of Money, particularly A Brief History of Money and The World on a Bitcoin Standard, both of which are on my site, for free.
I believe Bitcoin offers an interesting potential part of the solution.
Why?
Because money shapes incentives.
As Munger reflects, “show me the incentives and I’ll show you the outcome.”
A monetary system that allows governments to expand the money supply can use it to fund wars, genocide, or anything they want really.
The government spends with relatively no consequence and ordinary people pay the price. It’s tragic.
Worse, those costs can be difficult for ordinary people to see or challenge directly.
Bitcoin introduces a different model: a monetary asset with a predetermined and fixed supply that no government can manipulate.
So instead of using voting for politicians who promise peace and deliver war, we'd have to fund the war directly.
That could only happen if war was truly valued by the people, which most of the time it isn’t.
This is why 2,000,000 people protested in Italy and across Europe a year ago, which of course got no media attention, but was far greater in magnitude than the protests happening now.
War and the aftermath is so unpopular that the right in the U.S. won in part on promising to avoid it, and will lose the mid terms in part because they didn’t.
So the question becomes:
What if financing war became harder to conceal, harder to sustain, and more costly to future generations?
What if governments had fewer ways to shift the costs of today’s decisions onto tomorrow’s citizens?
Perhaps one way to encourage peace is to change the incentives around war itself.
We can’t eliminate all human conflict.
But we can make the worst of it much more expensive, so much so that perhaps there’s very little will for it and certainly none to sustain it.
(Wars are often popular in the very beginning, but quickly fall out of favor, yet they last for decades. US/Iraq being a clear example).
After all, if we want different outcomes, shouldn’t we examine the incentives producing the current ones?
The fourth turning postulates we’re heading into Winter, the most challenging season.
But Winter never lasts forever and is always followed by Spring.
The sooner we understand why it came, the better our chances of building something stronger when the flowers arrive.
Love you all. 🙌🙏