Inflation is the real Illusion

We’ve seen how conventional economists, and even most famous Bitcoin evangelists (Max Keiser for example), are interpreting all inflation as something incredibly bad, whilst a few visionaries are starting to write how actually inflation might not be such a bad thing.

I write here to show that inflation is actually an illusion, something that has hoodwinked us for a few years, at least since the advent of “Renewable Energy”, and Bitcoin.

“Renewable Energy” appears a very deceptive, profit-driven term, contributing to the illusion. There is no renewable energy, it all comes from the sun, either firsthand, live and direct from the sun, or secondhand, from the natural stored forms of energy capital on Earth.

For thousands of years we’ve survived solely on energy extracted from the Earth.

We’ve done that by commoditising all things in terms of capital, representing it, capital, in terms of money, where most recently our money has been in the form of money-as-debt.

The Gold standard was the classic example of money representing capital.

We see the tendency to consider energy as capital everywhere, we discuss energy, even electrical energy for accounting purposes, in terms of things like barrels of oil, and KWh. All are forms of stored energy, inferred to contain a fixed quantity of Joules of energy, all of which came from the live energy of the sun, which is not capital.

It only becomes capital after it is stored on Earth, and that is where it is least useful, where it no longer is creating, all of its creation is already done.

But because we can extract some of the energy of some things already created by nature back out, by de-creating it (Burning oil, splitting atoms, etc), we see fuel as an energy source, when it isn’t, it is only a storage medium of energy that came from the sun.

In the cases of Wind, Wave, and Hydro, we see dynamic forms of stored energy, where we can tap-off some of the live kinetic energy of Earth, to convert to the elecrical forms we find most useful, but all were originally sourced from the sun, just not as long ago as oil or coal, for example.

For sure we can only extract a very small fraction of the energy that created it, no matter which natural form of energy storage we consider.

Our most used energy is from fossil fuels, and we see a certain level of hazard is coming about as a result, with our planet starting to literally burn under heat-domes.

We might notice also that in order to preserve profits, and the business case of nuclear, we have never safely disposed of nuclear waste. At best we bury it. At worst we leave it underwater, or even floating on water. In all cases, sooner or later, its ingredients, still very active for thousands of years to come, will outlive their confinement.

Now it is turning out that proof-of-work tokens like Bitcoin are a greater force than gold for attracting investment.

We see an elliptical curve in the long term average relationship between gold and Bitcoin, beginning with a positive slope early in the history of Bitcoin, to levelling off a few years ago, and now curving downwards at an increasing rate.

We have to interpret that deterioration of perceived value between gold and Bitcoin very literally.

What we are seeing is the former king of capital, the favourite “Safe haven”, seemingly timeless investment that is gold, being trounced by Bitoin.

So Bitcoin isn’t just capital, it is something more.

I have explained elsewhere (In the “Bitcoin as a Kardashev Hinge” story), the a detailed story, together with some simple calculations, of the reason why.

Bitcoin is a measure of solar energy, to the value of around 1MW per Bitcoin.

What that means is that after we switch from the limited capital energy of Earth, to entirely unlimited solar power (As we must, and is happening anyway), a quantity of Bitcoin will be effectively proof of share of the total solar energy of Earth, divided by the total number of Bitcoin in circulation.

Now as Bitcoin was the first proof-of-work token to be established, and with its hard limit, it is uniquely the one that will always represent the solar energy capacity of humanity, when we become completely dependent on that, instead of the limited energy of Earth.

All other forms of money, must become unlimited, to honestly reflect the unlimited nature of the energy of the sun, each token of every currency except Bitcoin has to come to represent a quantity of Joules, of the energy continuously being received from sunlight.

That won’t be done willingly by any bank, government, corporation, millionaire, or any other capital figure of authority, or even anyone with only modest savings, because by our mindset of capitalism, we perceive the need to be able to enforce scarcity on those with less than us, as something necessary for our own financial safety.

But it will come, it has to, and is happening all the time, by Bitcoin continually punching ever bigger holes in the old zero-sum economy.

We shouldn’t be surprised at this, as we can see, endless free, clean fuel of hydrogen can be made directly from the endless free energy received for free from the sun, so why would we think that the money which has to be directly tradeable for that fuel should be limited?

What we saw as inflation by the old zero-sum, limited economy, the economy of extracting and trading the capital of Earth, only counts as inflation from the point of view of a limited world.

The capital of Earth is limited, but the energy of the sun isn’t.

Relative to the energy of the sun, capital has no value at all, it is the energy flowing from the sun which is the thing still creating, not stored as creation already done, like capital.

The value we always saw in capital is an illusion, now that we can see how the energy of the sun really works.

Money is simply moving to reflect that.




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Frederick Bott

Frederick Bott


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