The Optus Crash in Australia showed the Value of Cash
By Viv Forbes
Today’s world is awash with electronic money.
But yesterday, much of Australia’s electronic money disappeared for up to 14
hours with the crash of the Optus electronic network. The disruption to
business and the community was “immediate and profound”.
Rail networks, hospital services, retailers and banking were affected.
Naturally this was not helped by babbling politicians waving big sticks.
Shoppers rushed ATM’s to get cash for a cup of coffee. Some were unable to
pay for meals they had already consumed.
Here is a comment on the day:
Electronic money is the modern expression of a very old monetary fraud –
“fiat money”.
“Fiat Money” is token currency supplied and regulated by governments and
central banks. Its value relies on a government decree that it alone must be
used as “legal tender” in paying for anything in that country. Its value
falls as its supply increases.
Fiat money is not new – Marco Polo described its use in China over 700 years
ago. Travellers and traders entering China were forced by Kublai Khan to
exchange their real money (gold and silver coins and bars) for his coupons,
made from mulberry bark, each numbered and stamped with the Khan’s seal. The
Khan decreed that local traders were forced to accept them (“legal tender”).
Foreigners got the goods, the great Khan got the bullion and the Chinese
traders got the mulberry bark (a bit like getting the rough end of a
pineapple). By controlling the supply and exchange rates for mulberry money,
he became fabulously wealthy, and his citizens were impoverished.
But unlike electronic money accessed via Optus, mulberry money could not
disappear in a flash.
The world has a long history of pretend money.
During the American War of Independence, the colonial rebels had no
organised taxing power so they printed the Continental dollar to finance the
war. As the war dragged on, they printed too many dollars, and its fast
debasement gave rise to the phrase “Not worth a continental”. Later, in the
American civil war, confederate paper money used to support the army also
became worthless. It was widely referred to as “shin-plaster”, after its
highest value use in helping to bandage wounds.
Many dictators over the years tried the fiat money trick, but so many lost
their heads or their thrones that it fell into disuse, being replaced by
trusted real money such as English sovereigns, Spanish doubloons,
Austro-Hungarian thalers and American gold eagles. It is mainly in wartime
that people are sufficiently distracted or scared to allow rulers to
secretly tax everyone who holds their depreciating pretend money.
Financing Big Wars
The last century or so has seen the explosion of big governments and big
wars – race wars, class wars, world wars, regional wars, the war on want,
the war on drugs, the war on inflation, the war on terrorists, the war on
Covid and now the Net Zero War on carbon fuels and grazing animals.
All wars cost heaps of money. They are so expensive that to raise the full
cost from honest taxes alone would cause a revolt.
The monetary watershed was World War I, which saw governments mobilise all
community resources to the war effort. Money printing plus ration cards were
their main tools. Money creation destroyed currencies everywhere.
The cost of the war destroyed the German currency and the replacement papier
mark was subject to the terrible German inflation of 1923 which paved the
way for the rise of the Nazis.
Even the mighty pound sterling was fatally weakened by wars and the
discipline of the gold/silver standard was gradually destroyed. The British
gold sovereign, first minted by Henry VII in the 16th century, disappeared
from circulation at the height of the Great War in 1917. The British pound
became a fiat currency in 1931 and silver started to disappear from British
and Australian currency in 1945 after the Second Great War. Even the mighty
US dollar started on the road to ruin during the Vietnam War and gold
convertibility was suspended by Richard Nixon in 1971.
We have seen the death of much of the world’s funny money in just the last
50 years. For example, in Peru, one million Intis would buy a modest home in
1985; five years later it would not buy a tube of toothpaste. Brazil had so
many new banknotes they ran out of heroes to print on them.
In Vietnam in the 1980’s, factories had to hire trucks to carry the bags of
dongs to pay the Tet (New Year) workers’ bonuses. In 1997 in Zaire, it took
a brick-sized bundle of 500,000 notes of the local currency to pay for a
meal – no one bothered to count them. On the Yugoslav border in 1989,
tourists foolish enough to change “hard” currency for Yugoslav dinars got 14
cubic metres of dinars. “Dinars can no longer be measured in millions or
billions, but only in cubic metres”. It had become a cubic currency. These
grim records were eclipsed in November 2008, when Zimbabwe suffered
inflation of 98% PER DAY.
Most governments are good at destruction – concentration camps, gulags,
dictatorships, genocide, mob rule, world wars and . . . the destruction of
sound money. Fiat money is their underhand method of official larceny and
few people realise that the robbery is happening until it is too late.
Future generations will look back in wonder at modern monetary madness.
Words like peso, rouble, rupiah, baht, won, rouble, ringgit, inti, dinar,
tolar, ostmark, dong, lira, zloty, cordoba, sole, cruziero, and yuan will
join “shin-plaster” as descriptions of worthlessness. Most world currencies
are on the same slide to oblivion (the Australian dollar has lost over 90%
of its purchasing power in the last 70 years).
“You can’t print gold or store it in computers.”
Real money is always measurable by weight, such as pounds, grams,
pennyweight and ounces of gold and silver, or carats of gemstones. It cannot
be counterfeited or corrupted easily.
But fiat money relies for its value on the honesty and openness of the
rulers. Even a monetary fool such as Fidel Castro could see what caused
Cuba’s inflation. In 1993 he stood up at a rally and declared: “There are
nine billion too many pesos in Cuba”.
Yesterday’s Optus money crisis in Australia is a harbinger of the future.
But there is no safety in fleeing from Optus – to achieve their “Net Zero”
the Green globalists plan to abolish all cash so that they can ration what
we buy. “Sorry you have had your sausage for November – would you like a
green smoothie instead?”
The Optus shock warns us that electronic money will join Mulberry Money,
Shin Plaster and Cubic Currency in the long history of failed political
money. Even our degraded paper money is better than that.
We must protect our right to have and use cash.
Some Reading:
Andrew Dickson White, 1959: “Fiat Money Inflation in France”
The Foundation for Economic Education.
The German hyperinflation of 1923:
https://alphahistory.com/weimarrepublic/1923-hyperinflation/
Australian Dollar loses 76% of its value in 21 years:
https://www.asgoodasgoldaus.com.au/blog/australias-dollar-has-collapsed-76-i
n-21-years/
