Daily Balajisms – Digital lockdown
Social credit system with a human face.
Balaji Srinivasan was very early on Covid – tweeting in January 2020 that we will experience lockdowns, people will be wearing masks and remote work will go mainstream.
Since March 2022 he tweets about the upcoming (central) bank crisis that he calls a fiat crisis. We have experienced physical lockdowns during Covid, and they came without warning.
And soon we might experience digital lockdowns, says Balaji. Also, without much warning. When Cyprus, an EU member country, had their banking crisis ten years ago, they enacted so called bail-ins of banks. Depositors saw almost half of their money gone. The trust in local banks never recovered.
In today’s world, with social war between memetic tribes raging on social media – we all might become Canadian truckers and see our money frozen. Any day you might wake up on the wrong side of capitalism. From “it’s just a flue” to lockdowns in weeks or days. Dollar holders will become the bag holders, says Balaji.
Short selling might be banned, capital controls imposed, assets frozen, fiat-to-crypto bridges burned, cash payments restricted, and people forced to use CBDCs. Something like the Chinese-style social credit system (with a human face) might be coming to the West.
Arthur Heyes says that people need to get out from the US financial system – instead of inside money, that are liabilities on someone else’s balance sheet, they should move their assets into outside money, that don’t have a counterparty risk – like gold, real estate (in a crypto-friendly jurisdiction) or bitcoin.
Balaji has an out-of-the-money advice for companies – to get their legal documents in order as if they were in a merger or acquisition process – in order to be ready to become corporate refugees and leave for a friendlier off-shore jurisdiction. It’s like when people feel a war is around a corner, they get passports for themselves and their kids quickly.
There will be sanctuary cities and sanctuary states, within the US and abroad, for crypto and tech companies, predicts Balaji. He thinks a digital gold window will be reopened in red states and purple states in the US. It will be something like bitcoin.florida.gov – a simple BTC/USD exchange like Coinbase in 2013.
Balaji often mentions that history repeats, but with the opposite outcomes. He also has a helical theory of history. China is now a senior partner in Sino-Russian alliance. India is now a senior partner in the British-Indian relationship. A British PM of Indian descent and a Scottish PM of Pakistani descent might be partitioning Britain soon. What is the explanation for this phenomenon?
We hit peak centralization in the West somewhere around 1950s – with printing press, radio and television being centralizing forces, or broadcast modalities of communication and organization. Since then, decentralizing technologies like transistors, PCs, the internet and mobile phones prevailed and created a counter-movement. I think we can call it The Great Unwinding.
Nixon has closed the gold window in 1971, but a digital gold window might be open soon in crypto-friendly jurisdictions, like Florida that is explicitly against CBDCs.
Seeing Indian tech founders moving their money from the US back to India, following the Silicon Valley Bank failure, was one of the most striking moments that Balaji experienced. He divides countries and cities into an ascending world and a declining world. The most important axis for him is technological progressivism versus technological conservativism – or Bright Sun vs Black Mirror.
Slavoj Žižek often mentions how in 1968 the Western left lost faith in the USSR, after the Warsaw pact countries invaded Czechoslovakia and crushed the Prague Spring (Dubček’s attempt to create socialism with a human face).
An attempt at a digital lockdown might be a similar moment – when Western progressives lose faith in the US empire, after seeing their first-world problems vanish suddenly and be replaced by the third-world problems of financial repression.
Let’s hope that efforts to create social credit system with a human face will fail in the West. We live in an inverted century, says Balaji. It’s not just an Asian century, it’s all the countries that had a rough 20th century and learnt their lessons and got their houses in order that will prosper.
LKY wrote a book From Third World to First. Now a book with a reversed title is being written in the West – from first world to third. From one to zero. It’s sad but we have an option of collective exit to crypto-friendly jurisdictions in the short term, and building network states in the long-term.