When you’re right, you’re right—even if the rest of the world thinks you’re a kook and a crank.
That’s how the world saw Clair Cameron Patterson, an American geochemist who realized early in his career that his countrymates were poisoning themselves and the environment through their use of lead, particularly in leaded gasoline.
Long story short: The world thought Patterson was a wackadoodle, but then, decades later, the scientific community realized that, “Whoops—the wackadoodle is right!”
Which is why you no longer find leaded gasoline in America…
The above few paragraphs are, granted, an odd route into today’s dispatch… But the theme fits: wackadoodles who are right, even as the world scoffs at them.
Our first stop is El Salvador and a president—Nayib Bukele—who has held tight to his belief that bitcoin will free his country from financial enslavement by the West.
For several years now, Bukele has been using state funds to load El Salvador’s central bank with bitcoin as the country’s most important reserve-currency holding. Those holdings are up more than 50% as of late—a helluva lot better than had El Salvador tied its dingy to the anchor of the US dollar.
The problem is, the West loves its financial enslavement of small, emerging countries.
So it is, then, that institutions such as the International Monetary Fund and the World Bank are none too pleased that a dinky Central American nation is showing that bitcoin can be a path of financial freedom, sovereign self-determination, and a better bet than hanging on to crappy, heavily indebted fiat currencies from the West—namely the dollar.
The IMF, at this very moment, is so bent out of shape by El Salvador’s success with bitcoin (i.e., the IMF is soiling its Underoos at the threat to its significance) that it is doing all it can to prevent El Salvador from securing a $1.4 billion line-of-credit unless the country renounces its bitcoin policy.
Rightly, Bukele is telling the IMF that he wishes El Salvador and the international organization were better strangers.
Which leads me to our second stop—and the real point of today’s dispatch: A petition in Switzerland that’s aiming to alter the country’s constitution by demanding that, like El Salvador, the Swiss central bank add bitcoin to the country’s official currency reserves.
Will proponents gather up the 100,000 signatures necessary to put the proposal on a ballot for all the country to vote on?
I don’t know.
But over the last several years, the Swiss referendum process—one of the truest forms of direct democracy in the world—saw voters approve same-sex marriage, paternity leave, and a reduction in oil and gas use as part of a climate initiative.
Clearly, the Swiss are down with larger social movements that resonate with Gen Z and millennial voters.
So, just maybe, Nayib Bukele will have company soon in the bitcoin camp…
Obviously, one would expect the crypto industry to support the effort. But some economists are stepping up to support it, too.
Professor Gunther Schnabl, head of the Institute for Economic Policy at the University of Leipzig, and a former of advisor to the European Central Bank, framed the bitcoin proposal in terms of the Western world today: “Government debt has risen sharply in most industrialized countries, meaning that the risk of default has increased.”
The good professor sees the granddaddy of crypto as a legit tool for risk diversification within the Swiss National Bank’s foreign currency reserves.
I have to imagine Schnabl and Bukele would be fast friends if they ran into each other at a World Economic Forum mixer.
Calling this a trend—countries adopting bitcoin as a reserve—is much too early. At the moment, only El Salvador and the Central African Republic recognize bitcoin as a currency. Others including Paraguay, St. Kitts and Nevis, Ukraine, and Venezuela have all hinted at it, but there’s nothing official.
And, yes, these are all also-ran countries. Certainly not the heft of a US or a China or a Japan or a European Union.
But let’s pretend for a minute that Swiss voters say yes to a constitutional change…
Suddenly, Switzerland is the poster child of sovereign adoption of bitcoin—a significant Western economy that has officially recognized bitcoin as a reserve asset.
The Swiss government, even if it opposes the idea, cannot disregard the will of the people. That’s how Switzerland’s referendum process works (the way all democracies should work—hint, hint America).
Sovereign ownership of bitcoin would become a part of the Swiss constitution.
And just imagine how that would play though the IMF and its abusive tactics with El Salvador. Imagine the whip El Salvador would have in beating down the IMF.
“If it’s good enough for Switzerland, IMF, you can get busy leaving us alone now!”
I am so hoping that Swiss voters approve this referendum.
The wackadoodles need a win.