Respecting The Rules of Money

By Marc Nuttle

The prevalent question on many people’s minds today is, what currency will be stable in the future? By this, they mean, what money in the future will allow them to maintain their present lifestyle, whatever that may be, as they are currently doing with dollars today? Some worry about savings for what they fear may be an apocalyptic economic time to come.
 
The answer is…none without respecting the rules of money.
 
When we were children, our parents warned us of the consequences of defying certain rules of conduct. More often than not, we had to learn the lesson of the principle the hard way.
 
As adolescents, we at times looked for alternatives, through wishful denial, that could bend or wire around the rule to result in an alternative outcome. Again, we learned the lesson the hard way.
 
And so we are as adults, continuing many times to abjure the truth when it comes to money.
 
In the movie Cabaret (1972 film, ABC Pictures/Allied Artists), a musical number titled “Money Money” is a song that implies easy money is the solution to a happy life. It is, until too much of it is chasing too few goods resulting in inflation, distorting the experience. The supply of money must be managed to meet the emotional demands of a society to maintain equilibrium in prices.
 
Since World War II, world governments have struggled with deficit spending. Post-war reconstruction required massive amounts of capital. By 1974, inflation emerged as a problem. The world’s largest economies formed the G-7 in 1975 for the purpose of coordinating fiat currencies (removed from the gold standard) to allow for targeted budget deficits. This worked in the short term. Coordinated monetary policy permitted marginal deficit spending with little inflation.
 
Once the world’s infrastructure had been rebuilt, obeying the rule of balanced budgets should have been the asserted dictum. Instead, governments continued not only to run deficits, but to increase spending beyond the original managerial targets.
 
Governments have been on this opium ever since. Collective government world debt now exceeds collective world GDP. Covid was perhaps as great an interrupter in the world economy as World War II. Increased spending to recover may have made humanitarian sense. However, the principle that you cannot “print and borrow money forever” cannot be ignored forever.
 
Cryptocurrency came on the scene in 2009 with the first availability of Bitcoin. The idea behind blockchain digital currency is that it cannot be corrupted by government manipulation. The theory was that Bitcoin would replace sovereign currencies because governments would never discipline themselves to balance their budgets and properly manage the supply of money. Digital currency is also more efficient in that it does not require a banking system to execute transactions.
 
The problem with cryptocurrency is it cannot react to grassroots demand. It is simply a macro currency. Its supply is what it is, regardless of whether the economy is speeding up or slowing down. Advocates will explain that free floating market exchange platforms will account for this. This does not take into consideration the vulnerability of certain segments of society. Anyone on a fixed income struggles with price fluctuations. Inflation is always a direct result of the supply of money. Individuals on welfare, minimum wage workers, and those in retirement relying upon Social Security do not have the ability to easily navigate unstable prices.
 
A federal reserve, measuring several economic indicators including economic demand and the needs of society, is better equipped and positioned to manage the supply of money than a computer algorithm. Human intelligence, sensing and analyzing emotional elements of a citizenry, is infinitely more morally intuitive in addressing human needs.
 
The problem occurs when the legislative branches of governments design and pass policies that they cannot afford. Very few elected officials argue that these actions make any sense, yet they continue to pursue fatuous economic strategies, much like we did as adolescents when we embraced undisciplined behavior as an alternative to recognized truth, even with the threat of our own destruction.
 
Federal reserves cannot balance budgets. They can only do their best to accommodate debt. In the protocol of monetary policy, as it deals with the accumulation of debt, a reserve is limited in maintaining stability of currency.
 
Conversations around the local coffee shops can be heard exploring the efficacy of money. The conclusion of whether one should buy gold, invest in cryptocurrency, remain liquid in cash, or invest in real estate is inconclusive. It depends upon whether governments in the future will commit to respecting the rules of money.
 
Yesterday Vladimir Putin demanded that all payments for Russian gas be made in Rubles. Of course, Europe denied to acquiesce to this demand. President Xi is in negotiations with Saudi Arabia to buy oil in Yuans. Both China and Russia are attempting to control the value of their currencies. For cryptocurrency to be used as an international medium of exchange for commerce, sovereign currencies will be devalued. Communist systems cannot allow for prices to fluctuate outside of central government control. This is why China has outlawed Bitcoin anywhere in its financial system. The United States is considering its own digital currency. Every country must control transactions to a certain extent for the purposes of tax revenue. Without taxes, the government will fail. Any transition to cryptocurrency for universal application will result in challenging circumstances for government financing. 

Economic systems, no different than individuals, will ultimately face the consequences of breaking the rules of order. Subsequent restructuring will always result in a “reset” whether the surviving medium of exchange is a sovereign currency or a cryptocurrency. There will also be societal pain and suffering in the transition of the process. This human factor will dictate the terms of geopolitics.
 
An economic reset and restructuring is certain. The rehabilitation of currency as the medium of exchange for this new economic system must be managed so that the ultimate reset does not result in socialism, Marxism, communism, or economic serfdom.
 
“What is paramount is an absolute commitment to find solutions in our economic chaos through free enterprise principles. Not for the purpose of maintaining power with any group, but to maintain freedom for all groups.” Nuttle Report of July 21, 2020.
 
Money can make the world go around as long as governments follow the rules. If they do not, money can destroy freedom in the world as we know it.
 
Remember the truths of your childhood and eliminate learning lessons the hard way.
 
Freedom and free will are paramount over easy money in realizing happiness.
 
My name is Marc Nuttle and this is what I believe.

What do you believe?

Marc Nuttle is an attorney based in Norman, Oklahoma, who specializes in international trade, international foreign policy, and international political affairs. He is widely recognized for his expertise in forecasting political and economic trends. He represents corporations, business projects and political entities nationally and internationally. Mr. Nuttle is the founder of the New Horizon Council, a forum for the discussion of transcendent government and business principles.