Set­ting the money free

Antelope Valley Press (Sunday) - - Opinion - John Stos­sel is author of “No They Can’t! Why Gov­ern­ment Fails — But In­di­vid­u­als Suc­ceed.”

House mem­bers sum­moned Face­book’s Mark Zucker­berg to Washington, D.C., and grilled him — harshly — about his plan to cre­ate a new cur­rency, Libra.

“Why should we trust you?!” asked Con­gress­man Mike Doyle.

I liked it when Zucker­berg said, “I ac­tu­ally don’t know if Libra’s go­ing to work, but I be­lieve that it’s im­por­tant to try new things.”

He was right. That’s very im­por­tant.

The Libra would make it eas­ier to trans­fer money any­where in the world. It also prom­ises sta­bil­ity. Its value would be based on a bas­ket of currencies from dif­fer­ent coun­tries, which would pro­tect Libra own­ers from in­fla­tion in any one coun­try.

It’s an idea that de­serves a try.

But it may never be tried be­cause the clue­less politi­cians’ threats of pu­ni­tive reg­u­la­tion scared off many of its sup­port­ers.

Politi­cians want to crack down on Libra “be­cause they’re threat­ened by it,” says tech re­porter Naomi Brock­well in my new video. “This is go­ing to be com­pe­ti­tion for the U.S. dol­lar. Gov­ern­ment doesn’t like com­pe­ti­tion.”

Gov­ern­ments also like to con­trol any money that we might use.

“Want to send money to Rus­sia to a fam­ily mem­ber; it’s go­ing to be cen­sored. You want to send money to a relief ef­fort in Venezuela; it’s go­ing to be cen­sored,” says Brock­well. But if you use a cryp­tocur­rency like Libra or Bit­coin, “your money will get through. That’s an in­cred­i­bly pow­er­ful tool that gives peo­ple the free­dom to spend their money where they want to spend it.”

Bit­coin is harder to stop than a cur­rency like Libra would be be­cause Bit­coin doesn’t em­anate from one com­pany or gov­ern­ment mint. There’s no one owner of Bit­coin or most other cryp­tocur­ren­cies.

“It is the first cur­rency that is de­cen­tral­ized,” Brock­well points out. “That’s why it’s still around, be­cause they haven’t been able to have these hear­ings, haven’t been able to call the CEO of Bit­coin and say, ‘cease and de­sist!’ There is no server to un­plug, no com­pany to shut down, no CEO to throw in jail, so it per­sists! That’s re­ally ex­cit­ing.”

Dig­i­tal currencies “live” on thou­sands of in­di­vid­u­als’ com­put­ers, so no gov­ern­ment can stop them by pres­sur­ing any one com­pany.

That’s a rea­son they’re valu­able.

When Bit­coin started, it was worth vir­tu­ally noth­ing. But two years ago, the price of one bit­coin reached $19,891. Then it crashed to $3,192. As I write, the price is $9,390.

That volatil­ity de­ters many peo­ple from us­ing Bit­coin as money, but to those of us who don’t trust gov­ern­ments, Brock­well points out: “It is the only suit­able money for free peo­ple.”

Of course, many dis­agree.

“I think it’s a gi­gan­tic clas­sic pump and dump scheme,” says in­vestor Peter Schiff. “There’s noth­ing to give Bit­coin value.”

It’s “a bub­ble,” vul­ner­a­ble to at­tacks from gov­ern­ments. “They can get banks and fi­nan­cial in­sti­tu­tions to make it very dif­fi­cult for Amer­i­cans to use it.”

Schiff doesn’t claim we should count on dol­lar bills be­cause he doesn’t trust politi­cians either. He sug­gests peo­ple buy gold to hedge against politi­cians’ ir­re­spon­si­bil­ity.

“Gold has worked for thou­sands of years,” says Schiff. Un­like Bit­coin, “gold has ac­tual value. A huge in­dus­try needs gold: jew­elry ... con­sumer elec­tron­ics, aero­space and medicine.”

I’ve hedged against the dol­lar by buy­ing both gold and Bit­coin. My Bit­coin in­vest­ment did bet­ter. But Schiff says I’m a fool if I don’t sell it now.

I don’t know which way prices will move. But I know that it’s good to have al­ter­na­tives to gov­ern­ment-cre­ated currencies. The dol­lar’s value is only backed by politi­cians’ prom­ises. I sure won’t trust those.

Even when cur­rency is stable, gov­ern­ment can use its power over cur­rency to cen­sor peo­ple.

“The gov­ern­ment de­cided that they didn’t want Wik­iLeaks to re­ceive do­na­tions, so they froze trans­ac­tions,” ob­serves Brock­well. But they couldn’t stop Bit­coin.

She says gov­ern­ment has had “a mo­nop­oly on the money sup­ply for a very long time, and now con­sumers fi­nally have a choice. You can send Bit­coin peer-to-peer to some­one on the other side of the world al­most in­stantly at very low cost, and it can’t be cen­sored. That’s in­cred­i­bly pow­er­ful.”

It is. Al­ter­na­tives to gov­ern­ment mo­nop­o­lies are very good things.

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