Good Morning Everyone,
We’re at a fascinating point in human development (or regression depending on how you think about it) where the oozing of hubris is at all time highs and the absurd belief that we can control everything has gone mainstream. We can’t even control ourselves, let alone anything else. We (on a collective societal level) completely discount the incomprehensible complexity of a world we exist as only a small part of and have become numb to our naive interventionism as so many seem to be willing to ignore the destruction caused by this unconscious and pathological behaviour.
According to wikipedia a free market is as follows:
“In economics, a free market is a system in which the prices for goods and services are self-regulated by buyers and sellers negotiating in an open market without market coercions. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority other than those interventions which are made to prohibit market coercions. Examples of such prohibited market coercions include: economic privilege, monopolies, and artificial scarcities.”
We are the market. You and me.
This is not to say that everything would immediately become some kind of utopia if we were permitted to operate within a purely free-market dynamic. This notion is fantasy. Humans will inevitably be human and we are deeply flawed animals. We are so deeply flawed most of us deceive ourselves from even acknowledging this simple truth.
A free market would consist of good actors and bad actors. But this is the case within a regulated market dynamic as well. The difference is that regulation provides a safe haven for bad actors to “game the system” where as a free market would give rise to more competition and presumably weed out these bad actors over time, or at the very least provide the market participants with superior offerings and the ability to choose. Modern day fiat banking is easily one of the best examples of what happens when we try to “fix” things.
The issue with us trying to control everything and prevent bad actors is that we naively underestimate complexity and fail to acknowledge the impact of higher order effects. We perceive reality within a very narrow scope of time and a very specific set of circumstances, and often fail to observe higher order effects that take time to manifest and may not manifest in a way that directly effects us making it more likely to not be acknowledged or even noticed.
We are psychologically and culturally overly skewed toward hubris and simplistic binary thinking and severely lacking in humility, and a willingness to be open to complexity and the possibility we may be wrong.
Regulated markets enable and encourage 1) monopolies and monopolistic dynamics 2) distortion of pricing leading to; 3) lower quality goods & services 4) create unnecessary friction which; 5) excludes certain participants and 6) further amplifies all prior negative externalities
KYC (Know Your Customer) & AML (Anti Money Laundering) regulations are prime examples of iatrogenics - which means to help but instead cause harm. This is a classic output of a market that is not allowed to operate freely, and of course the road to crony-capitalism is paved with g00d intentions.
Bitcoin fixes this.
While a free market is imperfect by nature (as is nature if you are looking at short time horizons) - what it does is fundamentally align incentives. It will not censor anyone per se, but it will disincentivise bad behaviour and incentivise market participants to create or supply the best quality goods and services as the market will naturally be inclined to consume these - rewarding the behaviour/output. Thus indirectly communicating in support of the offering. It allows the complex mechanism of price to be unencumbered which leads to better quality and overall lower prices for consumers. It enables new entrants to more easily enter a market where they perceive an opportunity to create a superior offering as there is less barrier to entry and encourages those already within the market to “sharpen their pencil” as it were. All of this is good for consumers on the buy side of the trade.
Ironically, this is a simplistic view, as my daily letter is not a sufficient vehicle to go into a deep thesis, but hopefully you can get a feel for it.
The thing that i don’t think most realise, is that we can have this dynamic right now thanks to bitcoin. Bitcoin is a tool to enable freedom. As more and more people accept bitcoin, circular economies will develop, people will naturally begin to denominate in btc as opposed to political monies, and sats will become the standard unit of account.
Many people mistake the current environment for capitalism. This is not capitalism. Not even close. Bitcoin is in the process of reintroducing free market dynamics to the world, and the result is going to be glorious.
Optimism and gratitude are an unfair advantage in a world of fiat-quality attention and bitcoiners are abundant in both.
Free the market. Free the world.
Wishing you all well. I’ll talk to everyone tomorrow.
AK
