The World in Reverse

Over your whole life, your money has lost value year after year, and almost everything about how you live is shaped by that one fact. Now turn it round. Run the whole chain in reverse, through prices, houses, credit, wars, energy, and AI. What does ordinary life look like on the other side?

Everything below hangs on a single assumption, that bitcoin holds, meaning it stays decentralised and secure. That’s a higher bar than the network surviving. It means anyone can still check its rules and its supply for themselves, people keep holding their own keys, and it gets used as money rather than parked in a few custodians [firms that hold coins for people] as an investment product. If it ends up pooled inside the old system, you rebuild the old system with a new asset underneath it. So assume it holds in the full sense. That’s a bigger grant than it sounds. Two money systems can share a world for a while, but not forever, because prices settle on one unit in the end. Most of what follows describes the world after that has settled, not the year bitcoin survives. Savers get there first. Countries take decades.

Prices

On the other side, prices fall.

Competition pushes prices toward the marginal cost of production [what it costs to make one more unit once the system is running], and technology lowers that cost year after year. That force is already here. You don’t see it in your bills because the government and central bank aim for prices to rise by about 2% a year, and they create the new money and credit it takes to get there.¹ That new money cancels the fall. The gain from the better tools is real. Part of it reaches you as higher pay, late and unevenly, and the part that doesn’t goes to whoever got the new money first, through house and share prices. Remove that offset, and prices drift down at roughly the rate we get better at making things, which is what the productivity figures measure. In Britain that was near 2% a year before 2008, and between 0.7% and 1.3% a year from 2009 to 2019, depending on which of the statisticians’ two measures you take. As automation spreads, that rate will climb. In any one year it feels like nothing, and it compounds into a different civilisation.

Saving works again. Money kept in a drawer buys more as time goes on, without you doing anything, so you don’t need an investment account, a fund manager, or an opinion on markets just to stand still. Your payslip also stops being the score. Your nominal pay stays flat or even drifts down, and that will feel wrong to almost everyone at first. But the basket of things you buy falls faster, so over the years your hours buy more life. And no, people don’t stop buying because tomorrow is cheaper.² You buy a coat in winter and a phone when yours breaks, exactly the way people buy televisions today knowing next year’s model is better and cheaper.³ What does get put off is the purchase that can wait, and sometimes that’s a big one, like a car. What falls when people wait is the borrowing that would have paid for it, and life carries on. What dies is the pressure to spend before your money rots.

Houses

A house today is two products stapled together, a place to live and a savings account. Because money doesn’t hold value, people store their working lives in bricks, and that demand for somewhere to keep savings is much of what we call “the housing market”. That extra price is a monetary premium [the amount an asset costs beyond its usefulness because people use it to store savings].

When money holds value on its own, that premium drains out over years. Nobody needs the second product any more, so a house falls back toward its utility price, what it’s worth as a place to live. And build costs are falling too, with automation and cheaper materials. That part hasn’t happened yet. What’s happened is the measuring unit changing. A house that cost about 300 bitcoin fell to about 40 over a few years, and it’s kept falling since, even while the number on the estate agent’s board went up. All of that fall is bitcoin strengthening. None of it is housing getting cheaper, because housing got dearer in currency terms over the same years, so the strengthening had to cover that as well. The premium is still in the price, and draining it is the part still to come.

On the other side, a working couple saves out of wages and buys a starter home outright or close to it, and more buyers pay cash rather than borrowing for thirty years. Growing up expecting to owe a bank for that long stops being normal. Fewer people buy a house to rent out as their pension, because there are easier ways to hold savings than someone else’s roof. Your parents’ instinct that property always goes up was mostly a fact about the pound, not about houses.

Credit

Today most money is loaned into existence, so the whole economy is built to need borrowing.⁴ Flip the money underneath and the logic flips. Why borrow at interest to buy something today that will likely cost less next year, when the money in your pocket is gaining ground on it? Credit stays, and it gets honest. Lending mostly comes out of real savings rather than newly created money, so lenders charge properly for the risk they take. Loans mostly happen where the project beats what holding money already pays. Mortgages get shorter and rarer, businesses run on their owners’ money and the profits they keep more than on debt, and households carry buffers instead of running a balance on a card.

That honesty has a price. Failure is allowed again. Someone will always build a tower of promises on top of hard money [money nobody can add to], offering a return for your coins, and some of those towers will fall. But there’s no lever to rescue them with everyone else’s purchasing power [what their money buys], so they fail fast, the losses land on the people who took the risk, and the lesson holds. Saving is rewarded, recklessness is punished, and that discipline keeps the system clean. You owe almost no one, and no one owns decades of your future hours.

Wars

Large wars are ruinously expensive, and populations rarely vote to fund years of war with an honest tax bill. They haven’t had to. The state could borrow, the central bank could create the money to buy that debt, and the cost landed later as higher prices. It was carried by people holding money and by people whose pay lagged, and it was gained by people holding assets, including those who had borrowed at a fixed rate to buy one. Nobody signs that cheque. It gets signed for them.

Hard money takes the pen away, though the old kind never quite did. Gold standards came with a suspend button, and governments reached for it when the bills got too big. That repeat pattern is the way gold fails. Bitcoin has no such button. So a government that wants a sustained war has to take the money from somewhere people can see. It can tax, it can cut other spending, or it can borrow from lenders who are free to refuse and to set their price. It can also compel the savings it reaches through the institutions it licenses. What it cannot do is create the unit, so it cannot pay for the war without someone noticing the bill. Whichever way, somebody signs the cheque.

That doesn’t end human violence. It makes industrial-scale, years-long war much harder to pay for, because the quiet way is gone and the money has to come from somewhere people can see and contest. And it takes away the coercion that works by moving the unit, a decree that cuts what everyone’s money buys overnight. Today, where the state sets the exchange rate, officials can cut a currency’s value by a third or a half overnight. Prices jump across the board, and pay follows late if it follows at all. On the other side there’s no such decree, because no one can move the unit. The coercion that works through banks, exchanges, and the courts stays, including a law that rewrites what a contract written in hard money has to be paid in.⁵ But it reaches only what people keep inside those institutions. It can’t get at keys people hold themselves except one person at a time. Rules that stop money leaving a country get much weaker, because savings can cross a border in someone’s head.

What takes the place of the decree is competition for people. Once savings can leave, governments can’t hold citizens hostage through the currency. They have to attract them instead, with clear rules, fair visible taxes, and services worth what they cost. States get smaller because the funding trick that let them grow without asking is gone, and nobody has to win an argument about the size of the state first.

Energy

Energy goes into making and moving almost everything, so its price echoes through almost every other price.

Mining bitcoin gives energy a buyer of last resort [a buyer that will take power no one else can use, wherever and whenever it’s produced]. A dam in a valley with no town, a wind farm at 3am, flared gas at a wellhead, all of it becomes revenue, and that revenue pays for new plants and steadies grids that run on sun and wind. Miners switch off when real demand shows up and pay for the slack the rest of the time.⁶ As the cost of building generation falls, building more than today’s demand becomes affordable, and a buyer that drops out at peak improves how much of what gets built actually gets used. Wires and the wait for a connection still decide what reaches the grid, but a miner is a buyer that doesn’t need the wires.⁷ So a plant with no line to carry its power is still worth building, and mining pays for it until the connection or local demand arrives.

The offset dies here too. Today, when it gets cheaper to make power from the sun, the new money created to keep prices rising eats the gain before it reaches your bill. On the other side, nothing in the money offsets a fall in what it costs to generate power, so the fall reaches your bill. How much of it reaches you depends on the rest of the bill, the wires, the levies, and a market that prices each half hour off the dearest plant running. Cheap power then puts the energy-hungry things we currently can’t afford at scale within reach, from desalination to local automated manufacturing to carbon removal. The climate argument flips with it. A money system that has to keep pushing spending up can’t be squared with conservation. A system that doesn’t have to push spending up stops forcing resource use above what the technology needs, and it rewards doing more with less. Total use needn’t fall, because cheaper things get bought in greater quantity and the freed income goes elsewhere.⁸ What it does cut is the waste that the old money drove, the consumption beyond need that it pushed to keep prices rising.

AI

Technology lowering what things cost to make is the force the whole chain starts from. AI is the sharpest version of this force, because it drives the cost of making things toward zero in knowledge work and, as robots spread, in physical work too, and it keeps speeding up. Whichever money system is in place when it arrives decides whether those falls reach people.

Under today’s system, AI deserves the fear it gets. It cuts the labour a task needs, faster all the time, while policy holds your cost of living up. So wages lose ground to a basket that won’t drop, starting with the people whose work the machines take. Against the official basket, the prices the statisticians track, that loss has come in episodes after bursts of money creation, because pay moves after prices and the new money reaches markets and asset owners first. Against houses and the other things people save in, pay has fallen behind year after year, and the gains from AI land with whoever owns the models and the assets. The state’s answer is payments to people funded by creating more money, which raises the cost of living again and pulls more control to the centre. A few lives climb, most fall. That’s the surveilled, dependent path, and the fault is the money underneath it.

Under hard money, the same AI becomes the dividend machine. Every task it automates makes something cheaper, and this time the cheapness reaches you, because nothing offsets it. Giving up hours stops being a loss when the cost of living falls faster than the pay you give up. That holds while the job itself stays, because housing, energy, and the basics get cheaper against your savings as well as your pay. Losing a job outright isn’t that case. That loss arrives in one step, it’s large against a year’s pay, and it lasts for years. A basket falling at the rate we get better at making things makes that loss smaller, but it’s still a crisis. What cushions it beyond the basket is savings that hold their value and new work that keeps emerging, so the transition is less destructive than today’s, not painless. The question turns round, from “what happens to me when the machine takes my job?” to “what do I want to do now that a part-time week covers my needs?” Same technology, opposite world. The only difference is whether an expanding money supply can swallow the gains or they have to fall through to prices.

Ordinary life on the other side

Take Dani, a chef, under today’s system. Say her pay rises 3% and her rent and food bills rise 8%. Her savings account is a slow leak, and she’s told to put money she can’t afford to lose into funds she doesn’t understand, because doing nothing guarantees loss. Retirement is a spreadsheet of fear.

On the other side, her pay is flat. Her weekly shop costs a little less, winter after winter. She keeps her savings in money she holds herself, and the longer she waits, the more house they buy. She’s dropped to a four-day week because she can, and the fifth day is hers. Her pension plan is the boring one her grandmother would have recognised. Spend less than you earn. The background hum of financial anxiety, the one so constant you stop hearing it, falls silent.

Around her, everything else changes too. Whole job categories exist only to manage the damage of inflating money, and they shrink. Chunks of finance, compliance, and subsidy administration are among them. The people in them move to work that someone wants done, and there are fewer middlemen. Marketing weakens, because once competition has squeezed profits down, hype can’t keep a bad product selling, and customers become the marketing. Status drifts from what you own toward what you’ve built, because owning things that go up in price is no longer the game. People plan in decades. Crafts come back, because mastering something for ten years makes sense when your savings will still be there in ten years. And by the old measures, it all looks like stagnation, with GDP flat or falling while everyone’s life gets cheaper, because GDP counts paid transactions, and the whole point of this world is needing to spend less for more.

Where this picture is weakest

There are four places where I’d argue with myself.

The wage psychology is a genuine problem. The pitch is that your pay stops rising, and may well fall, while your life gets cheaper faster. That’s true, and it loses elections. Most of it belongs to the transition, and the transition is the dangerous part, but some of it survives the crossing, because a flat payslip still reads as failure to anyone raised on rises. The road there runs through policy that lurches one way and then the other, sharp falls in bitcoin’s price, and attempts at state money that can be programmed to control what you spend it on. It’ll be rough. I’m describing the far bank, not the crossing.

Then there’s hoarding. People worry that early holders become the new lords. But on hard money, the only way to keep growing your wealth is to make something someone freely pays for, and any attempt to buy control spends coins back out into society. You can’t print your way to power. What’s left of the worry is cultural, and nothing in the design answers it. On an asset that keeps gaining, holding pays and spending costs. Save all you like, in your own keys. The drift happens when people park their coins with a custodian and carry on spending in the old money. If enough people do that, custody piles up in a few institutions, and we’re back toward the old structure. It has to circulate as money. That’s on us, not on the design.

Nominal wealth falls. Anyone holding index funds and property will watch the numbers shrink, and it’ll feel like ruin. Much of that shrinking is the currency illusion unwinding, and losing that costs you nothing real. Purchasing power is the test, and when everything you buy is getting cheaper, a smaller number buys more life than the bigger one used to. The savings premium is the part I have to be straight about. The extra price a house carries because people store their savings in it is real purchasing power today, because you can sell the house and get real goods for it. When that premium drains, the owner loses something real, not just a number on a valuation, and the same holds for any asset people have been using to store savings. So expect two kinds of anger, and expect them to sound the same. Some will come from people who are, in real terms, fine. Some will come from people who really did lose the savings they had parked in bricks.

Then there’s timing. None of this arrives by a date, and it doesn’t arrive everywhere at once. It arrives person by person, then place by place. Patches of it already exist, in communities that earn, save, and spend in bitcoin without going back through the old money, and in people holding savings nobody can dilute. Read the early price falls carefully, though. While bitcoin is still becoming money, its purchasing power climbs for that reason alone, so a price falling in bitcoin mixes two things, goods getting cheaper to make and the unit getting stronger as the world moves into it. The second one is the crossing, not the far bank. The other side is a direction, and individuals get there long before their governments do. None of it is a prediction. It’s what follows if the assumption at the top holds.

The natural state of a free market is abundance shared out as falling prices, and the other side is that state with the suppression removed. Ordinary life is the same life with the leak fixed. Your time stops draining out through the money.