Authored by Charles Hugh Smith via Substack,
When faced with a problem, our minds naturally gravitate towards finding a single, simple solution to escape the complexities of interconnected problems. Problem-solving is often about pinpointing the main issue and coming up with an easy-to-understand and straightforward fix.
However, our brains struggle when dealing with a web of interconnected problems (polycrisis), leading us to apply solutions we are already familiar with. This tendency to modify the problem description to fit existing solutions is a common shortcut used by both leaders and the general population to alleviate uncertainty and anxiety.
One popular solution that many advocate for is: fix the money, fix the world. The idea is that by reinstating sound money, we can solve many of the world’s problems. This proposed solution is clear and easy to implement: make gold (or bitcoin) the only legal tender, replacing paper and digital money with physical gold coins (or their digital equivalents).
The motivation behind this solution is clear: the current monetary system, based on creating money out of thin air and accruing interest on credit-money, is unsustainable and will eventually lead to a crisis unless we change course.
I have often emphasized that “if we don’t change the way money is created and distributed, we’ve changed nothing,” as the current system funnels money to the top of the wealth-power pyramid, leaving the bottom 90% with diminishing purchasing power.
However, the “gold is the only money” solution only addresses one aspect of the problem: government currency devaluation. In a corrupt society, this solution does not eradicate corruption; it simply shifts corrupt practices to transactions involving gold or bitcoin.
Like all one-size-fits-all solutions, this approach overlooks the problems it creates, as everything in the system is interconnected in ways that may not be immediately apparent.
For instance, in a “gold is the only money” economy, ten individuals each deposit a gold coin in a bank to earn interest. The bank holds two coins in reserve, loans the remaining eight to a new business, and profits from the interest. However, in an economic downturn, this system can quickly unravel, leading to bank failures and loss of deposits.
To address the risk of bank failures, the government may guarantee deposits, but this solution is limited by the government’s own reserve of gold. Additionally, fluctuations in the global price of gold can impact the value of currency issued by the government.
Furthermore, relying solely on precious metals as money has its limitations and risks, as seen throughout history. It restricts the money supply, hinders economic growth, and can lead to scarcity and bartering.
Ultimately, there is no simple solution to complex issues like corruption or economic instability. Implementing broad, top-down fixes or tweaking problem definitions to fit convenient solutions only exacerbates underlying problems. Instead, a more decentralized approach, allowing for experimentation and adaptation at various levels of society, may offer a more productive path forward.
It is essential to move away from the mindset of endless growth and artificial solutions, recognizing that authenticity and intrinsic value cannot be replaced by monetary constructs. Real adaptation, rather than superficial fixes, is necessary to navigate the challenges ahead.