Central Banking Consipiracy Theories!

FEDERAL RESERVE CONSPIRACY THEORIES are the most prominent elements of far-right propaganda found in Bitcoin commentary. This is not to suggest a direct genealogical connection between, for example, Mullins’s writings and Bitcoin evangelism, much less control of Bitcoin discourse by right-wing propagandists like the Koch brothers or the think tanks they fund, but it is important to understand that this is not the exclusive or even primary way that ideologies work. Rather, these ideas catch on where they serve a need or fill a desire and where there is an opening for them (both Berlet and Lyons 2000; and Diamond 1995 provide excellent analyses of the reasons for the success of right-wing ideas in the United States). Bitcoin software has helped to create that opening, and the needs its ideology serves are the same ones served by Jones, Makow, Icke, and others. While there may in fact be direct connections between some of the more prominent conspiracy theorists and Bitcoin propaganda (one that is exacerbated by the promotion of Bitcoin in right-wing conspiracy forums), it is more likely that, and no less politically salient if, these tropes simply found a ready home in certain aspects of Bitcoin’s social and technical characteristics.

It is nevertheless remarkable how closely Bitcoin rhetoric replicates specific elements of right-wing Federal Reserve conspiracism. Late in 2013, as the price in U.S. dollars of Bitcoin began to surge, outgoing U.S. Federal Reserve chair Ben Bernanke made a statement before the U.S. Senate Committee on Homeland Security and Governmental Affairs in part about Bitcoin and similar technologies, in which he explained that the Fed “does not have authority to directly supervise or regulate these innovations or the entities that provide them to the market.” Among the sixty-two comments made to just one brief story (Farivar 2013) reporting these hearings on the relatively levelheaded technology site Ars Technica, we find the following:

The argument that fiat allows a country to avoid debasement is spurious at best given that monetary printing beyond demand either to spur economic growth, or collect seigniorage, is just like debasement in the end result’s decreasing purchasing power of nominal values. (user k2000k)[1]

The Fed isn’t a part of the government. It’s a privately owned bank, the shareholders, of which, are kept secret. They have exactly zero authority on monetary policy. They impose their control over the money supply by adjusting the interest rate on loans they give to other banks. (user greevar)

We entrust Congress with the power to declare war, regulate trade, raise an army with really cool weapons to blow things up, decide what we can be imprisoned or put to death for, decide what types of foods we can eat, etc. . . . but we can’t trust them with printing money. If you believe that last part then you should also be against any form of tax which puts our money in their hands. (user soulsabr)

Executive Order 6102 was passed to steal gold from the citizens of America [and put it] into Ft. Knox so that they could have leverage to inflate currency at will. It ensures that no child will have an inheritance that cannot be devalued over time. Self-sufficiency is the enemy of control; economic slavery in the name of profit and prosperity for the few. (user Vapur9)

Since slavery was outlawed, they needed a new way to get people to work for their “American Dream.” Independent, self-sufficient, and prosperous citizens don’t meet that criteria; so, they passed a new method by abusing the law-making process. Unfortunately, the aims of prosperity are leading us to societal decay at an even faster pace because we all see the sky falling. (user Vapur9)

Each of these comments uses language and ideas from right-wing extremism without identifying itself as such. An unsuspecting reader—and for that matter an unsuspecting commentator—might believe these sentiments to be unobjectionable statements of fact, thus priming themselves to accept several lines of conspiratorial belief while having never opened a book by Eustace Mullins or a JBS pamphlet.

This pattern is the rule rather than the exception. It is rare to find any story on Bitcoin regardless of venue—from mainstream publications to the far reaches of the Bitcoin-centric universe—that does not elicit significant and sustained commentary in which bedrock precepts of right-wing conspiracism are presented as if they are obvious and uncontestable statements of fact. Thus, on the thoughtfully critical economics blog Naked Capitalism, largely populated by well-informed readers, regarding a post titled “Everything I Was Afraid to Ask about Bitcoin but Did” (Murray 2013), in which the author notes that promotion of the currency depends on a certain “circularity of arguments about trust,” one commentator responds:

The bitcoin purpose, and its primary attraction is it can’t be manipulated, devalued, by central banks the way fiat can. As for volatility, all I can say is “bitcoin cost averaging” :)

It always seems to end up higher than it was a few weeks ago. The same can’t be said for fiat. Why would I want to pay some banker fee to get into a security when my currency can go up in value without any fees at all? (user R Foreman)

Here “central bank manipulation” is posited as the destruction of value, while Bitcoin’s utility as an investment—as I discuss below, nothing more or less than the selfsame “destruction of value”—is touted as a virtue. When another commentator, “DakatobornKansan,” writes that “what doomed communism, and will likely undermine Bitcoin, is the delusional hope that a protocol, a procedure, a network, an algorithm can neutralize the ugly selfish traits of human beings,” user “Robert Dudek” quotes the comment and writes, “This could just as easily be applied to Central Banking.”

Of course, when we look to sites already aligned with the right, even if they usually avoid conspiracy theory, engagement with Bitcoin results in a veritable deluge of extremist sentiment. Paul Krugman’s 2013 article “Bitcoin Is Evil” produced a wealth of conspiratorial commentary on the New York Times site where it was originally published, and even more outraged commentary in social media and on blogs. A typical response was found on the rightist economics blog Against Crony Capitalism, whose editor Nick Sorrentino wrote a piece titled “Paul Krugman Is Scared: He Says ‘Bitcoin Is Evil’: Undermines Central Banks” (2013). Others immediately leapt to discredit Krugman’s authority altogether (see Gongloff 2013; Yarow 2013). Comments to the piece itself include user “Michael Werner” noting that “The Creature from Jekyll Island gives a great history of the Fed and the damage it’s done over the years”; user “Oh Be Newman” writing that “undermining central banks is EXACTLY what we need!!!!!”; user “Glen Pfeiffer” stating that “the Fed is evil incarnate”; user “Scott B Handley” stating that “based on the ‘central’ bank’s records—I guess evil is a prerequisite”; and user “Anthony Morales” stating that “it’s all a scam: money should be nationalized, period. Every government should print and control its currency not no egotistical spoiled tyrants like the Rothschilds Morgans and the rest of the banking cartel they’re the reasons behind war poverty and hunger I’m sorry but if I could I would persecute all of them just like they did to innocent people throughout history.” Nearly all of the approximately one hundred comments to the story are of this tone and content, other than those that viciously target Krugman himself (e.g., user “Uwe Koch,” who calls Krugman a “commie cocksucker”). Unsurprisingly, Sorrentino’s post was enthusiastically reprinted by the Infowars website of major right-wing conspiracist Alex Jones.

One of the sites of most significant overlap between Bitcoin discourse and far-right political extremism can be seen with particular clarity in the use of the right-wing keywords “tyranny” and “liberty.” The most florid claim of Bitcoin advocates is that Bitcoin poses “an existential threat to the nation-state,” because nation-states supposedly live in fear that their hold on monetary policy via central banks like the Federal Reserve is threatened by the existence of alternatives to money (e.g., Soltas 2013). Jon Matonis wrote during Bitcoin’s first wave of wide publicity in 2012 that “Bitcoin prevents monetary tyranny” and that “just as the Second Amendment in the United States, at its core, remains the final right of a free people to prevent their ultimate political repression, a powerful instrument is needed to prevent a corresponding repression—State monetary supremacy” (Matonis 2012a).

Much of the literature promoting it—including books issued by reputable presses and self-published by enthusiasts, and articles from blog posts to pieces in leading publications like the New York Times, the Wall Street Journal, and Forbes—appears to be about nothing more or less than Bitcoin, the technology that underlies it and its practical uses in the world. Yet again and again, themes, ideas, keywords, and arguments from right-wing extremist thought appear, often stated as uncontroversial fact. Thus, leading venture capitalist and Netscape Navigator creator Marc Andreessen, in a New York Times piece that is on the whole balanced and sober, writes that Bitcoin data is relayed “through a distributed network of trust that does not require or rely upon a central intermediary like a bank or broker” (Andreessen 2014), taking for granted that this “requirement” or “reliance” is somehow something one would obviously want to avoid—but this is an idea, at least until recently, we find only in right-wing circles. Then Andreessen writes that “political idealists project visions of liberation and revolution onto it; establishment elites heap contempt and scorn on it.” But very few outside the right would see the people Andreessen is referring to as “idealists” (“ideologues” might be a more reasonable description), and the language of “establishment elites” is, especially given the context, too close an echo of JBS propaganda not to seem shocking when it occurs without comment in a major U.S. newspaper.

If Andreessen’s language includes unfortunate and possibly even unconscious reference to extremist ideas, the comments on his piece display no such consideration. User “Small Biz Owner” relates Bitcoin directly to Milton Friedman, and writes that “to be able to transfer money anywhere in the world instantly and without scrutiny from the IRS and the gilded Wall Street banks would be a revolution in the world’s monetary system,” displaying the typical right-wing disdain for taxation and desire to be free of law and regulation. User “Dombah” celebrates the idea that we might be able to validate a transaction ledger “without the need of a central governing authority.” And user “Eric” writes:

Cashing out [from Bitcoin] into USD would only devalue the transactions. The goal is to eliminate cash money in order to eliminate inflation based off printing Monopoly money printed by Governments. It seems far-fetched, but finding a supplier in a Country that I can buy goods for resell that accepted Bitcoin would allow me to earn 5% more right away. And selling to someone who would pay with Bitcoin would just increase the value of the goods sold. I will be able to buy for less and sell for less, others will have to pay more and sell for a higher price thus, feeding the Government its entitled fixed percentage of your business that they control by inflating the currency they provide. STOP letting the Government be the middlemen, they don’t have our best interests at hand.

This last comment, of a kind that is very typical in Bitcoin discussions regardless of venue, rehearses virtually the whole of conspiracist economics and political theory, especially the allegation that the “government” exists to deprive individuals of “value,” that taxes (“its entitled fixed percentage of your business”) are to be avoided entirely if possible, and that central banks “print” money and this causes value-destructive inflation about which we should all be worried.

Conspiratorial accounts of inflation and deflation are often key elements of “mainstream” Bitcoin presentations. Self-described “serial entrepreneur” and “Bitcoin entrepreneur” Andreas M. Antonopoulos was chosen by O’Reilly Media, perhaps the leading publisher of books about digital technology, to write its first entry into the Bitcoin market, Mastering Bitcoin (2014). As one would expect, the book includes a fairly detailed and clearly written account of Bitcoin technology, the use of Bitcoin as a currency, and so on. But in what should be surprising for a book ostensibly about technology, it also includes several substantial economic discussions in which extremist views are proffered, without attribution, as if they are simply common-sense analyses of relatively uncontroversial subjects. Antonopoulos offers matter-of-fact accounts of Bitcoin technology that incorporate conspiratorial theories about the Federal Reserve: “bitcoin mining decentralizes the currency-issuance and clearing functions of a central bank and replaces the need for any central bank with this global competition [to mine for bitcoins]” (2); “mining creates new bitcoins in each block, almost like a central bank printing new money” (26).

Among the most remarkable passages in this technical book is one in which Antonopoulos rewrites the economics of deflation in a way that serves the interests of Bitcoin promoters like himself, but at the same time dismisses out of hand almost all non-conspiratorial work on the topic. He does this not by mounting a sustained and detailed argument against the various economic accounts of deflation, but simply by providing his own ad-hoc argument that takes as a given a conspiratorial account of deflation (and its inverse, inflation). Antonopoulos does not refer to any economist, private or academic, when he states that “many economists argue that a deflationary economy is a disaster that should be avoided at all costs. That is because in a period of rapid deflation, people tend to hoard money instead of spending it, hoping that prices will fall” (176), failing to point out that he is being ambiguous about “spending” in passages like this, since it is much less consumer spending than production spending that makes deflation so destructive, because producers earn more money by saving than by manufacturing products. Antonopoulos then offers a completely ad-hoc account of economic cycles: “The hoarding instinct caused by a deflationary currency can be overcome by discounting from vendors, until the discount overcomes the hoarding instinct of the buyer. Because the seller is also motivated to hoard, the discount becomes the equilibrium price at which the two hoarding instincts are matched. With discounts of 30% on the Bitcoin price, most Bitcoin retailers are not experiencing difficulty overcoming the hoarding instinct and generating revenue. It remains to be seen whether the deflationary aspect of the currency is really a problem when it is not driven by rapid economic retraction” (176). This argument builds on the conspiratorial account of deflation (and inflation) to admit and then abruptly dismiss well-established economic principles, to Bitcoin’s advantage. “Discounting from vendors,” especially when seen from the perspective of producers rather than of retailers, is nothing more or less than accepting substantial losses as a simple price of doing business, which may be reasonable as an intermittent practice or for ideological reasons, but is clearly in direct violation of the very market principles that Bitcoin is supposed to realize.

Even when Bitcoin promoters claim to reject right-wing politics, they frequently take them on board anyway, further obscuring the political valence of their analyses. In a typically dismissive and sweeping piece on Falkvinge.net devoted to the question of whether “blockchain technology [can] help build a foundation for real democracy,” where “real democracy” is contrasted to representative democracy and Bitcoin is posited “as the new First Amendment app,” Nozomi Hayase (2015) discusses the “tyranny of central banks” and writes, “In tracing the history of money creation in the United States, attorney and author Ellen Brown [2008] revealed that the real trigger for the Revolutionary War was King George’s ban on the printing of local money in the American colonies. She described how after independence was won, the King’s economic subservience was not achieved by force but instead by the British bankers persuading the American people to take their paper money.” She goes on: “The founding fathers’ failure to define exactly what money was along with the lack of healthy parameters around its creation and control left a loophole within this system of representation for the shadowy forces to penetrate and later subvert the Constitution and further betray the ideals in the Declaration. The amorphous centralized creation of money has become a single point of failure that makes the entire system vulnerable to counter-party risk. This was seen especially in the Wall Street hijack of the monetary system with the passing of the Federal Reserve Act in 1913.” This is nearly word-for-word the Federal Reserve conspiracy theory of Mullins, Griffin, and Larson, filtered through Brown, whose undocumented revisionist history of the United States differs very little from and draws extensively on those of more explicitly right-wing authors. One notes in particular the typical conspiratorial assertion that “shadowy forces . . . penetrate and later subvert the Constitution.” Remarks like this are not the exception in Bitcoin discourse; they are the rule.