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Balaji Profile picture
@balajis
Mar 10, 2022 • 9 tweets • 5 min read • Read on X
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No, gold was defeated by the state. FDR seized the gold of US citizens with Executive Order 6102.
theconversation.com/how-the-us-gov… Image
This was just a particularly explicit version of how centralized states expropriated individuals over the 20th century to fund their operations.

Gold was seized at $20.67, then the dollar was devalued so it was $35 per ounce. The state booked the profit.
federalreservehistory.org/essays/gold-re… Image
Even Krugman admits it: fiat currency is backed by men with guns.
Let's go through some of the conceptual issues here.

"It was too inflexible to allow sufficient policy to be done"

In other words, gold once limited the power of centralized states to seize the assets of citizens for their own purposes, like huge wars.
"This monograph presents a survey of the crucial link between state power and finance from the ancient era through to the present day. Cicero once said that the true sinew of war was endless streams of money."
press.armywarcollege.edu/monographs/455/ Image
"Investment in accordance to productive capacity"

Indeed, you want to invest in projects with real cash flows. But you also don't want your money debased via inflation. So the measure of any investment is whether it can outperform simply holding BTC.
For years, retail and professional investors alike have benchmarked their returns in BTC terms. That's why coinmarketcap.com makes charts like this easy. You can see whether the no-op of simply holding BTC outcompetes an investment. Image
Additionally, you can quantify the daily fees paid, which can be plugged into a DCF model just like cash flows, even though these are chains rather than businesses.

This is a different sense in which BTC and other coins actually are "productive assets".
cryptofees.info Image
Technologies like mass production & mass media enabled the growth of centralized states till ~1950. The transistor, PC, internet, smartphone, and BTC are now *on balance* decentralizing that power...albeit not without an attempted Counter-Decentralization.
sotonye.substack.com/p/if-einstein-…

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More from @balajis

Balaji Profile picture
Jan 24
After America, China vs the Internet.
After DC, Xi vs Satoshi.
China is moving into Canada.
Tech is moving out of California.
And the world is moving out of the dollar.
What that adds up to is Communist vs Maximalist.

Because after the dollar ends, DC is out of money.
So: Carney, Newsom, Walz, Mamdani turn to Xi.
And MAGA, Elon, Texas, Miami turn to Satoshi.Image
I agree that places like Alberta will be a battleground (and indeed are already battlegrounds; see Bessent's recent comments).

This was an alternate map:
Image
Read 7 tweets
Balaji Profile picture
Jan 18
WHO LOST CANADA?
It was obvious that China/Canada would happen. Here's how it happened, and what may happen next.

(1) First, in early 2025 it looked like Canadian conservative Pierre Poilievre was a straight shot to win Canada. Instead, all the MAGA posts about annexing Canada undercut Pierre, boosted left nationalism, and turned what looked like a sure thing into an epic defeat. The result was Mark Carney:

(2) Carney is on the left but is far more intelligent than his predecessor, Justin Trudeau. He's also the former governor of the Bank of Canada, and understands that the G7 (including Canada) is in the midst of sovereign debt crisis. And the Canadian dollar is going the way of the US dollar, which is to say that it's going to zero. Canada needs access to hard goods and will trade natural resources to get that. Hence, China. Carney's Canada may become a sort of North American Russia, trading oil and lumber to China for cars and electronics.

(3) Who lost Canada? The fundamental reason this happened is that MAGA ironically doesn't understand its own self-interest. Even the term "America First" is misconceived, because it groups a Blue American like Elizabeth Warren together with a Red American like JD Vance...when in reality the Red American and the Red Canadian (like Pierre Poilievre) have much more in common. All the "joke" posts on annexing Canada managed to needlessly put Red Americans at odds not just with Blue Americans and Blue Canadians, but also with Red Canadians.

The Greenland thing will have exactly the same effect, as it'll end up pushing Western Europeans to China. That's actually why most ultranationalist movements fail: they're just so shortsightedly tribal that they're terrible at building coalitions.

(4) Anyway, while Carney is the first to be this explicit about aligning with China, expect many other Western leftist leaders (like Newsom and Walz) to line up with China over time. The reason is that while Democrats really did fight Communists from ~2021-2024 over the question of who'd run the world's most powerful state, Democrats lost. All the chip sanctions and isolation tactics that somewhat worked on Russia, and frankly might have worked on almost any other country, just didn't work on China...because China had enough internal economic scale to essentially be their own autarkic civilization, and build whatever they needed.

(5) So: the anti-China Biden Democrats have been replaced by the China-curious Newsom Democrats. And now the China-aligned Carney Canadians. With Carney making the first move, you should expect many more blue state Democrats to align with China, particularly those on the West Coast like Newsom.

(6) It's simple coalitional math. Democrats are the ingroup, Republicans are the outgroup, and Communists are the fargroup. So, for Democrats: the enemy of their Republican enemy is their friend. And there is much for them to admire in the Chinese political system. After all, Democrats and Communists both built one-party states:

(7) Newsom in particular is likely the next shoe to drop, because even in 2023 he was reaching out to Xi. He's also spoken in Xinhua (Chinese state media) about becoming China's "long-term, stable, and strong partner." Newsom posts images of himself shaking Xi's hand, while also posting images of Trump in handcuffs. It's clear which President he's more comfortable with:

(8) The California wealth tax is also worth mentioning here. As M. Guimarin correctly pointed out, the net effect of the wealth tax is for blues to drive tech out of the state. That's not an unintended consequence: the purpose of the wealth tax was to either rob or deport the sole remaining political opposition to Democrats in California, namely technologists.

(Side note: Democrats are historically much better at mass deportations than Republicans, as they take a whole-of-society approach to it, and persist with it over decades, and do it silently and nonviolently. That's how Republicans were pushed out of university faculties, media companies, and California itself. It was once a dark red state, and now it's deep blue.)

(9) Anyway, with the technologists pushed out of California, Newsom's blues can welcome in the Chinese, who won't be subject to the same wealth taxes as they aren't US citizens.

(10) There is also an obvious geostrategic aspect to this: Chinese Canada is a bridge across all the blue states, from the West Coast to the Northeast. So as blue states like Minnesota and California engage in more "soft secession", they can all link up with Canada, and get supplied by China.

Decades ago, this map was made as a joke.
Perhaps it becomes all too real.Image
Image
Image
Image
See also this post from 2023.

Newsom has significant room to attempt left populism, by refusing to enforce tariffs on Chinese goods that land at Canadian ports. He's signaled willingness to do that, and that may be how this manifests.
balajis.com/p/only-newsom-…Image
See also this popular post on "soft secession" by blue states. Tim Walz' recent invocation of the 10th Amendment is in this vein.

Of course, this is an inversion from decades of Democrat rhetoric. But that doesn't matter. The ideologies of the past are breaking down, with blues now endorsing states' rights and federalism now that they've lost DC...and reds embracing federal power now that they have DC.

It's all just tribalism now.
The Disunited Tribes of North America.
cmarmitage.substack.com/p/its-time-for…Image
Read 5 tweets
Balaji Profile picture
Dec 3, 2025
If a country stay smalls to remain true to its roots, it eventually gets absorbed by an empire.

Conversely, if a country plays for empire, and truly achieves world domination, it absorbs so many that its subjects eventually outnumber the imperial core. And thus the empire, too, loses touch with its roots.

Stay small and get conquered.
Get big and get diluted.
I like Switzerland and agree that it was arguably an exception to the rule. But it isn’t anymore and hasn’t been for some time.

It capitulated to Obama in 2009 on financial privacy, and so Swiss bank accounts don’t really exist. The Swiss (perhaps understandably) sanctioned Russia after 2022 and nuked the Credit Suisse bondholders, in violation of financial neutrality. That neutrality is now found only onchain.

The country is also de facto a member of NATO and the EU, even if not de jure. And is moving towards de jure. It’s a member of the Schengen zone and signatory to 100+ bilateral treaties, which means much of its law is already written in Brussels.

Basically, like all Western European countries, it’s already just a protectorate of the American Empire and no longer has real foreign or domestic policy independence.

And Switzerland now feels it needs to *formally* join the US/EU empire or get beaten by Russia, which is the dynamic I mentioned above: small countries get absorbed voluntarily into one empire, or involuntarily into another.Image
It’s still formally neutral, but it’s neutral in name only. The economic and military benefits of being part of a scaled empire were too great. See post above.

Unfortunately for Switzerland, it’s losing its neutrality at a bad moment in history, by being sucked into the gravitational black hole of the Western sovereign debt crisis. It’s getting pulled into a declining empire, instead of benefiting from a rising one. Maybe it suffers less damage than its neighbors due to legacy neutrality, but it won’t be unscathed.

That said, if you had to live in Western Europe, you’d likely live in Switzerland, as it may have the best financial position among its neighbors. Yields have actually gone negative there. It might be the cleanest dirty shirt in the region.Image
Read 4 tweets
Balaji Profile picture
Nov 7, 2025
Communism shatters economic relations, but ultranationalism breaks diplomatic relations.
If the far left’s failure mode is not understanding self-interest, the far right’s failure mode is not understanding other-interest.

That is to say: we know the far left doesn’t viscerally get the idea of capitalism, of building products, of sometimes just not having the money to do something. The far left fantasy is of total independence from needing to work at all. They don’t understand economic scarcity.

But the far right similarly doesn’t get the idea of diplomacy, of building coalitions, of sometimes just not having the votes to do something. The far right fantasy is of total independence from needing to work with others. They don’t understand political capital.

And that is also a failure mode. If you can only cooperate within your small tribe, you can’t even scale up. And then your tribe loses.

(The alternative is international capitalism, which is more practical than the socialist left and more scalable than the nationalist right.)Image
When you go *too* far to the nationalist right, you limit your coalition to only those who are both right-of-center and citizens of your country.

But only China has the scale to really do everything in one country. Everyone else needs allies.
Read 6 tweets
Balaji Profile picture
Oct 14, 2025
The AI flippening. Image
Crypto has also decentralized to Asia. Image
About 55% of unicorns are still in the US, but the trendline there is also towards decentralization. Image
Read 4 tweets
Balaji Profile picture
Oct 8, 2025
There's dark talent around the world, from the Midwest to the Middle East. Backing this talent is the right thing to do morally and the smart thing to do economically.
To be clear: I'm not talking about sending more tech talent to the US. Instead, I'm talking about backing dark talent around the world.

That includes the many white kids from places like the Midwest who've been unfairly quota'd out of Harvard. But it also includes those outside America whose societies were ravaged by war, socialism, or communism...and who are just now starting to become productive again.

The goal is global equality of opportunity. The Internet actually now provides the basis for uniform rule-of-law via rule-of-code, starting with Bitcoin and smart contracts. We just need to execute from here.
Yes. That's what the blockchain is: everyone worldwide gets access to their ideal monetary policy, payments, smart contracts, and entity formation. Enforced by incorruptible & transparent computer-based judges. And opted into on a purely voluntary basis.
Read 4 tweets

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