SUMMARY

• Not all cryptocurrencies have the same functions; treating “crypto” as one interchangeable blob is the fastest way to sound ridiculous.

• Cryptocurrencies are a subset of digital currencies, not a synonym for them.

• Some digital currencies have no owner at all, while others are controlled by a private company or government.

• The permission structure and consensus model of a digital currency tells you more about its risk profile than any price chart does.

Most anti-cryptocurrency arguments are riddled with logical inconsistencies, factual errors, and misrepresentation. Many a major news outlet, think tank piece, and op-ed misleads readers by treating multiple cryptocurrencies as fundamentally the same. Worse, some treat “digital currency” and “cryptocurrency” as synonymous. To most with even a cursory understanding of digital currencies and cryptocurrencies, many “anti-crypto” framings and arguments look mostly like willfully ignorant hand-waving, partisan grandstanding, or knee-jerk institutionalism.

But there are good arguments to be levied—both in favor of and against—digital currencies and cryptocurrencies.

This article is mostly for the serious skeptics and the critics. I want you to make better arguments against cryptocurrencies—if that is the position you hold—because then we have a better and more informed debate. You may find you change your mind about one or more, or not. That’s up to you.

So first, let me come clean. Yes, I did pull you in with the “not all crypto” title. Many of you are probably here with popcorn, ready to rage about “money that has no intrinsic value” or “dumb internet money.” I get it. That used to be my opinion, too, years ago. As I learned more, I realized that not all cryptocurrencies are the same and became slightly less full of shit in the process (in the eloquent words of Joseph Heath).

If you’re a crypto skeptic and have ever argued (or witnessed an argument) on social media with someone about something related to crypto, you’ve probably run into someone turning around to argue technical specs with you.

As someone who is in favor of some cryptocurrencies and not others, I have to admit, it is indeed quite frustrating to explain in 280 or 300 character spurts on the interwebs why, say, Bitcoin is categorically different from, say, Dogecoin. As you inevitably start writing a long thread, you absolutely start to sound like the stereotype of a guy in a hoodie with taped-together glasses sitting in a basement typing furiously away about how, “Um, akshually, you see, some are proof-of-stake and others actually have some other, rather interesting properties that…”

And that’s partially because there are a lot of people who meet some portion of that stereotype, but at the risk of distorting my online image to that of someone with an internet lisp (possible?) arguing technical specs—there really are major differences, and it matters greatly if you want to argue about cryptocurrencies without sounding like an ignoramus or a shill.

So, let me tell you what this article is not, first. I’m not going to argue in favor of cryptocurrency adoption, nor make the case for any specific digital currency, nor try to offer advice about what you should do with your money (which I do not do, period).1 This also isn’t an article listing and breaking down specific or common bad arguments or misconceptions about cryptocurrencies per se. (Those belong in future articles.)

Now let me tell you what this article is. I will aim to put the distinctions between cryptocurrencies in plain English so that the next time you encounter an argument about crypto, you walk in better armed to hear it and distinguish between hand-wavy nonsense and a well-argued statement. I do not pretend to be a technical expert on cryptocurrencies—and I’ve had to do a good amount of additional learning to write this article—so for the true technical experts on cryptocurrency, I’d appreciate your critiques and corrections.

(I'm also breaking from normal writing convention here, for the reader's sake: rather than ask you to memorize alphabet soup, I'll pair abbreviations with full names throughout, not just on first use.)

So, let’s dive in.

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The Different Kinds of “Internet Money.”

You may have some memory, as I do, of being in elementary school and having your teacher tell you that, “All squares are rectangles, but not all rectangles are squares.” We were learning about categorization. That’s thing one we’re doing here. Thing two is identifying the difference between squares and triangles. Thing three is why the categorization matters so you don’t start claiming that triangles are rectangles.

You may also have some memory of looking for a recipe online and then first having to read through the entire history of pasta and how one particular chef first reconsidered the all-important value of the tomato whilst standing in grandma’s backyard. I’m not going to do that. Storytime and narration are for another article.

Bottom-line up front:

• All cryptocurrencies are digital currencies, but not all digital currencies are cryptocurrencies.

• Different digital currencies have vastly different qualities and intended usages.

• In broad media coverage, there are five broad, main groupings of digital currencies that get widely discussed, very often imperfectly:

  • Store-of-value cryptocurrencies;

  • Platform cryptocurrencies;

  • Stablecoins;

  • Central bank digital currencies (CBDCs); and

  • Meme coins.

These groupings have just one thing in common—they all live natively on the internet. That’s it. Beyond that, there is no single unifying quality they share in common.

(Not all rectangles are squares. Not all digital currencies are cryptocurrencies. Not all cryptocurrencies are the same. Not all tomatoes come from gramama’s garden.)

So, what are the differences between all of them, and why does it matter?

Digital currencies can be categorized across many, many properties, but for the skeptic, I would define the following eight as the most important.2 Fret not—this article will cover just the first four.

1. Function
   What is the intended usage of the currency? (What is it for?)

2. Issuer
   Who issues the currency?

3. Consensus mechanism
   How does the ledger (the record of transactions and ownership) reach agreement on who owns what?

4. Permission model
   What are users permitted to do with the currency and under what circumstances?

5. Supply policy
   Is the supply capped or uncapped, and how do units of the currency get created or destroyed?

6. Representation model
   How is the currency represented and transferred?

7. Security model
   How is the network secured against malicious actors?

8. Privacy model
   How private are users and transactions on the network, and how is that protected?

These qualities of digital currencies are all critical to determining whether the currency is useful or not for some purpose, under what circumstances, for what ends, how secure it is, and so forth.

You might still be sitting there asking yourself, “What’s the point?”

I’ll start with function, first, since that’s a main thing most skeptics, critics, and casual observers mix up. You may or may not know it, but not all digital- and cryptocurrencies are trying to be the same thing. In fact, most are trying to be dramatically different things.

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1. Function

What is the intended usage of the currency? (What is it for?)

The intended usage of digital currencies varies greatly, and some currencies have multiple functions—intended and otherwise. Here, we might distinguish a currency’s intended function, or purpose (what the currency is trying to be and do) from its real-world function (what the currency actually gets used for).

That distinction is important for some currencies whose actual real-world use cases differ from their intended purpose. (In fact, much of the serious debate over cryptocurrencies is over how well their real-world function aligns with their intended function, and the prognosis for achieving those functions.)

Here, I’m going to treat function and purpose as the same, since interrogating the differences between those would need a nitty-gritty deep dive that would probably put you right to sleep.

Store of value. These currencies are intentionally made to be a good store of value; they’re meant to hold value over time, as they achieve broad adoption. Some also aim to serve as a method of final settlement, and in the long-term, as a unit of account.

Examples: Bitcoin (BTC), Litecoin (LTC), Zcash (ZEC)

Smart contract platform. These currencies are intended not as a store of value per se, but as a method of hosting “smart contracts” that allow self-executing programs beyond simple transfers, and are typically cryptocurrencies. The archetypal model is usually a blockchain (such as ETH) that lets developers build applications (or smart contracts (like USDT) directly on top of the network.

Examples: Ethereum (ETH), Solana (SOL), Cardano (ADA), BNB Chain (BNB)

Payment rail. These currencies are designed to enable payments, rather than to be the main currency of interest to hold. Payment rails differ based on who the payment rail is for, and what transactions the payment rail is intended to facilitate.

For example, some payment rails are meant to enable peer-to-peer transactions, whereas others are more geared towards servicing business-to-business transactions, or mixed between the two. Likewise, some payment rails enable easy transactions within a specific currency while others are meant to facilitate transactions between currencies.

Examples: Bitcoin Lightning Network (LN), Bitcoin Liquid Network (L-BTC), XRP (XRP), Stellar (XLM), Hedera (HBAR), Litecoin (LTC), Nano (NANO)

Stablecoin. Stablecoins are currencies designed to hold a stable value relative to some external currency or asset (often pegged 1:1 to a national currency), as opposed to storing a stable value of their own. Most achieve this by holding reserves to back the currency or asset in question, though some use other mechanisms to maintain the peg.

Examples: Tether (USDT), USD Coin (USDC), Dai (DAI)

Central bank digital currency (CBDC). These are exactly what they say they are, with important qualifiers (see the Mini CBDC vs. Cryptocurrency Debate Explainer below). CBDCs are digital representations of national fiat currencies. Unlike stablecoins, they are directly issued by central banks, and thus directly controllable by governments and central banks at a granular level.

Examples: Chinese Digital yuan (eCNY), Nigerian Digital naira (eNaira), Russian Digital ruble, Indian Digital rupee (e-rupee), EU Digital euro

Privacy coin. Privacy coins are expressly cryptocurrencies, and, as their name suggests, are built specifically to maintain privacy by hiding transaction details (sender, receiver, and/or amount). They use cryptography beyond the ordinary pseudonymity of a public ledger to maximize user privacy.

Examples: Monero (XMR), Zcash (ZEC)

Governance token. Governance tokens aren’t “currencies trying to be money” but rather tokens that grant the holder voting rights over decisions within a protocol or organization of some kind, such as changing fees, upgrading code, or allocating treasury funds. They are, quite literally, tokens for governance of some (often decentralized) organization or network.

Examples: Uniswap (UNI), Compound (COMP), Sky (SKY)

Utility token. This is another case of a cryptocurrency not trying to be a currency per se in the way we normally conceive of it. Rather, utility tokens grant access to, or pay for, a specific service within a particular ecosystem, and so operate more like a usage credit.3

Examples: Ethereum (ETH), BNB (BNB), Chainlink (LINK), Filecoin (FIL)

Meme coin. These are your joke currencies. The vast majority of meme coins are cryptocurrencies whose value is driven almost entirely by internet meme culture, humor, community sentiment, or other memetic quality. Many don’t typically try to be anything other than that, though some have attempted to evolve towards other functions after being popularized. Because they’re not originally intended for any meaningful uses, these are the cryptocurrencies most often derided as “shitcoins,” though the pejorative term is subjective.

Examples: Dogecoin (DOGE), Pepe (PEPE), Shiba Inu (SHIB), Trump Coin (TRUMP)

The differences between just Bitcoin, Ethereum, USDT, Digital yuan, and Dogecoin are vast. It’s the main reason that so many eyeballs roll when anti-crypto op-eds, reporting, podcasts, and institutions lump all of these into one big “crypto” or “internet money” label. Most commentary also treat the proponents of any given cryptocurrency as proponents of all cryptocurrencies. (They are not. No, really.)

Many criticisms claim or imply relevance to all of “crypto” while mentioning non-crypto digital currencies and describing only meme coins, leading to many a straw-man argument, whether ignorantly or intentionally. That’s a mistake tantamount to criticizing the United States, the EU, the OSCE, ASEAN, China, Japan, Nigeria, and the Kingdom of Wallachia all in one broad “government” stroke as being unserious and having no real national authority.

Not only are some of those supranational governments, some of those are not even governments, and the criticism really only applies to the Kingdom of Wallachia—which was explicitly established as a joke and has no pretense of being a government with real national authority. You’d immediately come back with, “All governments are political bodies, but not all political bodies are national governments,” and proceed to launch into your own akshually statements.

And you’d be right.

2. Issuer

Who issues the currency?

The issuer of a digital currency is, essentially, who hands it out—who has control over making new units of the currency. The answer to this question is often, but not always, the same as the answer to the governance model—who has the ability to change some (or all) of the currency’s properties? The answer to either question has major implications for the risk of financial censorship.

This is another big category for skeptics to get right, in particular, and there’s a lot of variance. Some digital currencies are issued by companies, some by governments, and some have no issuer. In fact, the two largest cryptocurrencies (with the highest market caps by huge margins) are those that have no issuer.

No issuer. No company, foundation, or government controls the currency’s protocol, supply, or rules. For a digital currency to have no issuer, its issuance must be automatic, rules-based, and protocol-driven, which is why this category applies exclusively to cryptocurrencies.4 How the protocol manages issuance is a question of the consensus mechanism, supply policy, and governance model for each individual cryptocurrency, and offers additional, major distinctions.

Examples: Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE)

Distributed / collective issuer. This is a bit of a niche issuance condition; a formally defined, open-membership body (anyone holding enough governance tokens) makes binding decisions on issuance through on-chain voting. Technically, there is no pre-defined issuance, but rather a form of voting-based issuance.

Examples: Sky (SKY), Uniswap DAO (UNI)

Federated issuer. A group of individual authorized issuers, often expandable, determines and controls issuance amongst themselves as they see fit. There’s only one prominent example, and that is Liquid Bitcoin (L-BTC). As noted above, L-BTC is a federated side-chain of Bitcoin that acts as a payment rail. Issuance of L-BTC is fixed at a 1:1 exchange for Bitcoin deposited into the federation’s pool. While technically issuers could modify this, the federation’s continued observance of this peg is what maintains trust in the network. Hedera (HBAR)—its own, much smaller cryptocurrency—is issued and governed by Hedera Council, and is another example.

Examples: Liquid Federation (L-BTC), Hedera Council (HBAR)

Private issuer. A private issuer may be an individual, company, or organization that has control over issuance (and often governance as well), controlling supply and frequently also redemption terms, even if broader network validation and consensus is more widely distributed. This covers two structurally different assets: redeemable claims backed by reserves the company holds, and natively-issued, freely-floating currencies where a company retains outsized influence, even if the token isn't a claim to, or backed by, any other asset.

Examples: Tether, Ltd. (USDT), Circle (USDC), Ripple (XRP), Binance (BNB)

Government issuer. Unlike other kinds of issuance, this exclusively applies to central bank digital currencies (CBDCs), as distinct from stablecoins pegged to a government’s currency. A government or central bank directly controls the currency’s supply and issuance, functioning as a digital form of the country’s existing fiat currency rather than a separate asset, granting the government granular control over issuance (and often user accounts).

Examples: People's Bank of China (Digital yuan), Central Bank of Russia (Digital ruble), European Central Bank (Digital euro), Central Bank of Nigeria (eNaira), Central Bank of India (Digital rupee)

This is another source of wry humor for many, as news outlets will often refer to “crypto executives.” This leads to the great misfortune that many uninformed readers and headline-skimmers conclude that cryptocurrencies (particularly the largest, such as Bitcoin or Ethereum) are owned by businesses with executives who control them.

Extend the term out just a bit and it immediately reveals the error: calling the CEO of a cryptocurrency exchange a “cryptocurrency executive” is like calling the head of a traditional financial exchange or a bank a “currency executive.” Technically correct-ish (very ishy), and some cryptocurrencies (especially shitcoins) are centralized, but the term is very misleading.

Consensus mechanism

How does the ledger (the record of transactions and ownership) reach agreement on who owns what?

In even plainer English, the question of consensus mechanism asks: “Who or what is validating my payments and certifying that I own stuff?” That matters especially because the answer tells you a good deal about counterparty risk and credibility.

Some consensus mechanisms are less compatible, or even fundamentally incompatible with other digital currency models in important ways. (For example, it’s hard to have a decentralized currency that’s managed by just one authority.)

Proof-of-stake (PoS). In proof-of-stake, essentially, if you own part of the currency, you have a say in how the ledger is validated, updated, and maintained. Many of these operate proportionally; the more currency (stake) you own, the more say you have.

Proof-of-stake advocates argue that proof-of-stake creates an incentive for users to reach consensus around accurate ledgers and introduces massive capital cost to overpower that consensus.

Critics argue that it lacks what's sometimes called "unforgeable costliness." Unlike proof-of-work, a validator's influence in proof-of-stake is determined by their existing stake in the very ledger that stake is meant to secure, creating a circular arrangement that makes alternate transaction histories cheaper to fabricate and tends to concentrate power with early, large holders over time rather than requiring it to be continuously re-earned.

Examples: Ethereum (ETH), Binance Coin (BNB), Solana (SOL)

Proof-of-work (PoW). In proof-of-work, computers compete against each other to solve a difficult math puzzle by brute-force guessing—using real electricity, or “work” in the process—and whoever solves it first earns the right to add the next batch of transactions to the ledger and collects a reward for doing so. (This still leaves the question of “what work?” that is a further difference between PoW currencies.)

Proof-of-work advocates argue that it becomes prohibitively expensive to alter the ledger’s history or fork off a competing version of the ledger, since doing so would require out-computing the entire honest network combined. Additionally, proof-of-work allows anyone to independently verify the ledger, rather than simply trust an individual to keep one honestly.

Critics argue that the energy expenditure securing the network doesn't produce anything of independent value beyond the security itself. Few dispute that it is secure or trusted, but rather criticize the computation energy as “wasted” and an environmental externality.

Examples: Bitcoin (BTC), Dogecoin (DOGE), Zcash (ZEC)

Proof-of-authority (PoA), sometimes called appointed authority. In appointed authority, the right to validate and add to the ledger isn’t earned by stake or computation at all, but granted directly to a specific, known set of parties, approved by whoever created or runs the network.

Proof-of-authority advocates argue that consensus can be reached quickly and cheaply, since there’s no puzzle to solve and no need to coordinate among a large, anonymous crowd of stakeholders—just a small group of pre-vetted validators, sometimes taking turns.

Critics point out that this method inherently requires centralization of control within a small validator set, and thus relies entirely on trust in the benevolence and accuracy of those validators. If you don’t already trust whoever approved those validators to always make correct and apolitical decisions about money, there’s little independent reason to trust the ledger itself.

Examples: VeChain

Sole authority, or a trusted third party. In sole authority, there is no validator at all, nor anything being coordinated. A single party maintains the ledger directly and unilaterally decides what counts as valid, with no separate agreement or validation. This is a fully centralized and controlled currency system.

Advocates of this model argue that it’s the fastest and most efficient approach, since there’s no puzzle to solve, no stake to weigh, and no group of parties to reach agreement with—just a single record-keeper updating the ledger directly.

Critics point out that this removes the very idea of independent verification. There is no mechanism, cryptographic or otherwise, forcing the ledger to reflect anything other than what that one party decides it should. If you don’t already trust that party to always make correct and apolitical decisions about money, there’s no fallback. There are no competing validators to catch an error and no way to check the ledger’s accuracy against anything outside that party’s own say-so.

Examples: Digital yuan (eCNY), Digital euro, Digital ruble, Digital naira (eNaira), Digital rupee (e-rupee)

There are a few other outliers, such as stablecoins like USDT (the largest U.S. dollar stablecoin to date) and USDC (another U.S. dollar stablecoin). These technically have no ledger or consensus mechanism of their own, but rely on cryptocurrencies such as Ethereum (ETH) or Tron (TRX) as smart contract platforms. They nonetheless behave like private, permissioned, sole authority currencies in terms of issuance and supply.

Permission Model

What are users permitted to do with the currency and under what circumstances?

There are two main permission states: permissionless and permissioned. The permission model asks two interrelated questions:

1. Who is allowed to participate in running or validating the network? Can anyone participate (permissionless), or only approved parties (permissioned)?

2. Once someone holds a unit of the currency, what can be done to it? Can an issuer or network operator freeze, seize, or block a transaction (permissioned), or is that not technically possible (permissionless)?

Permissionless, in the digital- and cryptocurrency context, is usually used to answer both questions simultaneously. Users do not need permission to spend their currency freely and anyone can participate in verifying and validating the network; issuers and operators cannot exercise either governmental or private control. The permissionless nature of Bitcoin, for example, is a main appeal.

However, even in some permissionless currencies, validators can still exercise control over transactions. Holders of the currency are nominally free to hold or spend their currency at will, though validators of the network can more readily exercise control over the ledger to censor transactions, and have. Validation is permissionless, but transactions can be censored.

Some currencies have the inverse locus-of-control condition, such as USDT and USDC. Because USDT and USDC operate as smart contracts on top of other cryptocurrency networks (ETH, for example), they have a built-in freeze/blacklist function that only the issuer controls, despite Ethereum’s permissionless validation system. Network validators have no say over whether a freeze happens, but simply record whatever the contract dictates once the issuer “flips the switch.” Validation is permissionless and has no influence over transactions, but the issuer can still issue freezes.

Fully permissioned systems are those in which the issuer and/or network operator retains control over who can participate and can freeze, seize, or block transactions. This is effectively the same as traditional fiat currencies and banking, just digital, and is a core feature of CBDCs—governments can censor transactions and freeze or seize assets.

Don’t Be Ridiculous.

Now that we’ve established a few of the more obvious and several of the more important differences between various digital- and cryptocurrencies, you can (temporarily) remove the broken, taped glasses that have mysteriously spawned on your face.

You now know enough to catch most lazy headlines, spot the slew of strawman arguments lumping Bitcoin in with meme coins, and tell a square from a rectangle. (Presumably.)

Now, if you really want to avoid sounding like a dolt, you’ll read Part 2 and the subsequent takedown article shredding all my favorite stupids that have been said about various cryptocurrencies. That way you don’t inadvertently say another wildly inaccurate thing, like, “Crypto is all just speculative, infinite internet money, anyway.”

In any event, make better arguments about digital- and cryptocurrencies, don’t be afraid to akshually, and don’t be ridiculous.

Images created and generated by Cameron Vaské with Grok.

(Like what you read? Help me fund the coffee that goes into these articles by pledging to my publication.)

I’m sometimes remarkably grumpy for a Zillennial. Most days, I’m rather chipper and upbeat, but yesterday’s social media circus had me banging my head against the proverbial wall, prompted me to write this thread shouting into the void on BlueSky, and finally, resolved to write this article today. It really makes my eye twitch when otherwise intelligent people I tend to agree with repeatedly say or do ridiculous things, and yesterday was yet another case of that.

A renewed debate has cropped up after a 2023 clip of then-Senator J.D. Vance resurfaced on X (and elsewhere) in which Vance criticizes the U.S. global reserve currency status. Which is not what you’d think would, you know, animate such an active political debate. I’m happy the debate’s being had, but how it’s being had leaves much to be desired. Much.

Bad Faith Memes & Ignorance.

What really got everyone going was this Phil Magness post on X, reupping the clip:

It prompted quite a lot of engagement and reaction. A good portion of it is bad faith (or simply ignorant) partisan dunking on Vance, like these posts from Joshua Reed Eakle at Project Liberal.

Josh went on to have Project Liberal post some memes about it on X, and this morning, took to Substack to publish a note on this issue, reiterating and adopting a framing that had picked up steam in the comments. Josh is arguing that what Vance is saying is tantamount to the “you will own nothing and be happy” meme. Josh goes on to argue this is Patrick Deneen-style postliberalism.

I’m picking on Josh because I think Project Liberal is a good project with valuable purpose and a good mission. I do recommend following Phil Magness, Josh Reed Eakle, and Project Liberal, and reading liberalism.org. Their work worth engaging.

But on this debate, Josh—like many liberals and conservatives who are sometimes too quick to defend institutions—has got this one very wrong.

What did Vance actually say?

So here’s what’s got my pants all up in a wad about this. Vance didn’t argue that. Not remotely. He actually said quite the opposite. Here’s a few lines of quotes from the actual video, which I’m quite certain most of the partisans online have not bothered to listen to carefully:

“I am not sure I think the reserve currency [status] is actually good for the United States of America. I think there is a good argument that the reserve currency status is akin to coal in Appalachia—it’s a resource curse. It allows your consumers to consume very cheaply. […] We can just borrow, basically in an unlimited way because we have the reserve currency.”

This is far from the radical, “You should just not be able to buy things. Cheers, lads,” message Josh (and many others) are claiming it is. But wait—there’s more (emphasis added):

“So we have this massive subsidy to cheap debt for the American consumer. Well, that’s good, right? Consuming is important—especially food, medicine, and things like that. But I think it’s a massive tax on American producers.”

Whoops. Vance is actually saying—in no uncertain terms—that yes, global reserve currency status does allow Americans to consume foreign goods cheaply, and that’s a good thing.

What Phil, Josh, and so very many others have either failed to see, or chosen to ignore while dunking on Vance here is that this is not a postliberal argument, but an expressly liberal one, and it’s one both of them should really know and acknowledge—particularly Phil, since he’s an economic historian, and undoubtedly knows more than I do about the history of economic thought.

So how am I so sure this isn’t some postliberal voodoo nonsense? Because this critique didn't start with Vance—it traces back to Robert Triffin. So, who was Robert Triffin?

Robert Triffin, Liberal.

Robert Triffin (1911-1993) was a Belgian-American economist who, among his other accomplishments and activities:

• held positions at the U.S. Federal Reserve, the International Monetary Fund (IMF), the Organization for European Economic Cooperation;

• helped administer the Marshall Plan while serving in the Economic Cooperation Administration; and

• was a staunch supporter of European integration, contributing to the integration of the European monetary system.

This isn’t a secret, either. It’s in his biography, provided freely by the institute named after him, Robert Triffin International, which aims to help further the study of monetary policy and European monetary integration—an expressly liberal project.

I hope the irony is landing acutely. Triffin was one of the liberal architects of the international monetary system Josh and others are jumping out of their seats to defend, not just in the United States, but in Europe, too. Whoops again.

So what did Triffin say, and how does it connect to what Vance said, in so many words, that has today’s liberals spinning in their seats?

Triffin was a contributing architect of the global monetary system, but he wasn’t uncritical of it. Today, he is famous primarily for one thing: the Triffin dilemma.

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The Triffin Dilemma

Triffin observed that the result of the Bretton Woods agreement, granting the U.S. dollar global reserve currency status, would result in high demand for U.S. dollar reserves. Not particularly wild—this objectively makes sense. It’s the reserve currency. Foreign central banks need reserves. You have a higher demand for dollars.

Triffin argued that as long as the U.S. ran the balance-of-payments deficits needed to supply the world with dollar liquidity, its foreign-held dollar liabilities would keep growing relative to its gold reserves—eventually undermining confidence that the dollar could be converted to gold on demand. (That happened—U.S. President Nixon broke dollar-to-gold convertibility in 1971.)

He argued that if the U.S. instead corrected those deficits, the world would face a shortage of reserves, since gold production alone couldn't keep pace with global trade growth. He therefore argued the Bretton Woods system was structurally unstable and likely to fail either way, and advocated creating a neutral reserve asset—not tied to gold or any single national currency—to resolve the conflict. His ideas helped pave the way for the IMF's creation of Special Drawing Rights in 1969.

Many who find Triffin’s argument credible—both liberals and illiberal populists—have since gone on to add the same point that Vance shared here as an extension of Triffin’s dilemma following the breakage of the U.S. dollar peg to gold. Stephen Miran, Trump’s former Chair of the Council of Economic Advisers, is one of them.

The argument is that given continuous high demand for the U.S. dollar as a reserve, the dollar will remain “artificially” strong—and therefore make foreign goods and services cheaper to buy for Americans. At the same time, it would also make American goods and services more expensive to sell to the rest of the world. Higher demand, higher “price” or value of the dollar relative to the currencies that float against it.

American business and labor would have a harder time competing with the rest of the world over time given the valuation differential, likely leading to the erosion of the productive and industrial parts of the U.S. economy that made the U.S. dollar strong and worth holding as a global reserve currency, and thus still ultimately cause the global dollar system to collapse.

Let’s rewind the tape: what did Vance say again?

“So we have this massive subsidy to cheap debt for the American consumer. Well, that’s good, right? Consuming is important—especially food, medicine, and things like that. But I think it’s a massive tax on American producers.”

Producers. Business and labor getting together to produce American things. Producers, production, productive economy. The argument Vance is making is, ‘Hey, look, that kind of did happen, and I think it’s costing us more than it’s worth because it’s making it harder for Americans to make and sell things.’

He’s not entirely wrong. Not only is it harder for Americans to make and sell things abroad, it’s more expensive for Americans to sell to each other relative to alternative products and services from abroad. That means less money coming in for American workers and businesses, and less circulating within the United States.

Pointing that out might sound like an anti-globalization narrative, but it’s not. It's arguing that the global monetary and financial system, as implemented, is undermining itself. In and of itself, it is not an argument against free trade, free markets, or any other liberal and classical liberal ideas.

Vance and other populists tend to employ this argument to anti-globalization ends—such as defense of tariffs—however, and that’s where the connection with the liberal part of the argument ends.

But that’s not what much of the online argument is over. Too many claim any criticism of the U.S. global reserve currency status is simply illiberal or postliberal or America-hating without arguing the case or the point raised. And that’s exhausting and deeply self-defeating.

The debate isn’t completely ignorant.

There’s a quote from Vance—in a Politico article critiquing Vance’s economic stance—that accompanied at least one post by Phil Magness:

“‘Devaluing’ of course is a scary word, but what it really means is American exports become cheaper.”

You’d think this quote might jog Phil’s memory about the Triffin dilemma or the very real debate that liberals and liberal economists were having in the Bretton Woods era—but no, not amid the follow-up posts and flurry of memes about owning nothing.

Ah. Almost. I mean, he’s right. He really does believe that—and who knows what he truly believes after flip-flopping on Trump over the course of his political career—but that is a far cry from the “You will have nothing and be happy” meme that Josh and others went with. Perhaps a different meme is appropriate for this:

There were nonetheless many in the comments and in their own posts—myself included—who got the Triffin argumentative thread and tried to express this to Phil, Josh, and others.

Among the more honest to share their own views—and there were good faith, honest views on both ends of this argument—were those who: a) read markets regularly, and b) are familiar with the Triffin dilemma and the broader debate about the monetary system and global reserve currency status.

Perhaps my favorite—and by now, regular readers might already be familiar with her—was Lyn Alden, who posted:

Lyn generously made Chapter 13 of her book Broken Money: Why Our Financial System is Failing Us and How We Can Make It Better available for free at that link, which I’ve also shared here. To any and all of my readers—the chapter is worth reading on this subject. I actually frequently recommend the entire book, and very often point people to Lyn’s very polished and simplified short video explaining many of the key concepts, shared below.

A brief excerpt is in order to illustrate the argument she, and many other like her, are making:

“This sounds great for Americans at first. Our currency is unusually strong since it is more widely held globally than other fiat currencies and therefore has an extra monetary premium. Entities from countries all around the world hold dollars and dollar-denominated assets like Treasuries and equities. However, this extra currency strength greatly increases American import power and reduces American export competitiveness. It becomes expensive to pay American workers compared to workers in other countries, including both developed and developing countries. A structural trade deficit develops, and never seems to be resolved, decade after decade. Over time, more manufacturing facilities leave the United States and head to places like Germany, Japan, Taiwan, China, and Mexico. Workers in the United States generally cease to build expertise in manufacturing compared to their counterparts in more industrially competitive countries.”

– Lyn Alden, Broken Money, Chapter 13, p. 157-158

It’s a sound and serious argument, and spurs many other good arguments—including those about U.S. military readiness given the decline in U.S. manufacturing jobs, industry, and capacity. If the United States’ hegemony is indispensable to buttressing the liberal world order, and the final arbiter of terms is the ability to enforce the rules of that order, then gutting American military readiness is a big problem.

I would also argue that it is fundamentally a liberal one, in the broad philosophical and economic sense. It just isn’t neoliberal.

It's not the only liberal argument on this issue. There are other credible takes that complicate the picture, some pushing back on how far Triffin's dilemma should be stretched to explain today's concerns, others extending it in their own direction.

I particularly like the point raised in this EconLib article by Leonidas Zelmanovitz, which argues that both Miran and Sternberg (a critic of this viewpoint who writes for the Wall Street Journal) are wrong about the absolutism of their critique, noting:

“The true “dilemma” is not an iron law of reserve currencies but a consequence of U.S. fiscal profligacy. If the United States balances its budget, global demand for dollar assets can be satisfied through private-sector channels that foster productive growth. It is only when the public sector runs persistent deficits that reserve demand translates into overconsumption and debt accumulation.”

Lyn addresses this point in her book well, I feel, and argues, if memory serves, that it is not necessarily true that the U.S. will be forced to constantly expand its money supply to meet external demand, but rather that the incentives of its elected officials are to spend more and tax less to win elections, thus creating fiscal dominance where monetary policy is driven by fiscal deficits forcing an expansion of the money supply to finance growing U.S. debt and interest payments.

Leonidas’ and Lyn’s takes are well-accompanied by Biagio Bossone’s argument in this article for the Center for European Policy Research (CEPR), in which he states:

“In this context, the vulnerability is not that the US ‘must’ run deficits, but that the financial system might overproduce dollar claims that collapse when risk perceptions shift. This is what happened in 2008, and again in 2020 when the US Federal Reserve had to intervene to backstop global dollar liquidity. […]

Miran’s concerns about US manufacturing and national competitiveness are real. But framing them in terms of a revived Triffin dilemma misdiagnoses the problem and risks distracting from the real sources of vulnerability: an overly elastic global financial system prone to boom-bust cycles, and a domestic policy regime that has underinvested in workers, innovation, and industrial capacity.

We no longer live in a world where the reserve status of the dollar hinges on the US current account. We live in a world where that status hinges on the credibility of US institutions, the depth of its markets, and the robustness of the infrastructure that underpins the global dollar system.”

This is effectively arguing under the same premise in different logical directions—U.S. reserve status is no longer bound by current accounts, but by the credibility of its institutions (presumptively including its ability to balance its budget and repay its debt), its market strength and resilience, and the global dollar system architecture. It’s another argument that we can maintain U.S. dollar reserve status, conditionally. Effectively, Triffin’s dilemma is descriptive and dated, not current and prescriptive.

And I think that’s a fair argument, too. It depends on whether one finds the incentives of US institutions and the global monetary system credible in the long-run as they presently exist.

I could go on to talk about the purpose and philosophical roots of liberalism; the decline in purchasing power; the rise of wealth inequality and the Cantillon effect (as I wrote about yesterday); the bellicosity behind the petrodollar system; and the illiberal consequences of fiat currency itself in a constitutionally limited democratic republic. But I won’t here.

The point is: this is a serious topic for liberals, and the ones who are serious about it are already showing up to bat. The debate is there to have.

Liberalism.

I’ve spent a good long time clearing Vance’s name on this issue. It’s deserved—on this issue. But that doesn’t mean Vance doesn’t push postliberalism or argue in favor of tariffs, which is expressly illiberal—he does. Vance’s comments also conflated the global reserve currency status of the dollar with globalization itself, and argued against globalization on those terms.

There’s an argument on liberal grounds to be had there, but only if we take him to mean how we pursued globalization. He has on numerous occasions separately argued strongly against globalization, too. I think we can therefore safely say that the position Vance took was not a liberal one about fixing globalization, but employing a liberal critique to illiberal ends.

So, let me be clear—my goal is not to portray or whitewash Vance as a lowercase-l liberal. He is not—expressly, clearly, and in his own terms. I disagree with him fervently about most things. I don’t like his politics. I think he’s wrong way more often than he’s right. I don’t consider him to be a good example of a principled actor. I worry about his intentions and I distrust them.

But if liberals simply vilify anything he says because they either a) just don’t like him, ‘so anything he says must be bad,’ or b) don’t understand their own intellectual history, liberals will not only look mockingly ridiculous while doing so, but inadvertently cede, in the public space, genuinely liberal debates and topics to illiberal opponents.

And there are real, persuasive, and principled liberal and classical liberal arguments to be had on this topic—from both sides of the debate.

The debate we should be having.

It is absolutely fine and a respectable position to take to argue in favor of keeping the U.S. dollar as the global reserve currency. It is likewise fine and an equally respectable position to take to argue against keeping the U.S. dollar as the global reserve currency. There are good arguments for either, and we should hear them.

So, here’s a very short outline of a better, liberal debate on this topic, starting with a partial and more principled position that Josh, Phil, and others should have taken—and perhaps might still take:

Vance is literally arguing the U.S. should divorce the dollar from its role underwriting the liberal world order. That will make foreign goods more expensive at home for Americans who are already struggling with affordability. More to the point, this would weaken the United States’ influence and reduce demand for U.S. dollars, making it harder for the United States to afford such high debt expenditures.

This isn’t a plan for American leadership, but a surrender of one of the tools of the liberal order that makes the United States so strong.

We have to keep the U.S. dollar global reserve currency status if we want to maintain the global monetary system we built.

And then a good faith opponent would argue something along the lines of:

Vance is a postliberal and wrong about many things, but this is a clear and liberal argument. Just as it makes foreign goods cheaper to buy, it makes our own goods more expensive to sell, so we sell less of them and weaken our domestic economy over time. Global reserve currency status for the United States gives the state massive international influence, lets us finance our debt cheaply, and lets consumers buy things cheaply, but it also makes for fewer exports, fewer jobs, and makes it more expensive for Americans to buy American goods compared to foreign ones. The debt is also unmanageable, and the money supply is actually increasing rapidly, devaluing American wages and savings even as the dollar remains strong relative to other countries’ currencies that rely on it for reserves.

If it weakens the American economy over time, it’s no longer making America strong.

We should abandon the global reserve currency status in favor of a more balanced international monetary system that doesn’t disadvantage our own workforce.

And you could go back and forth there—what the tradeoffs of having a global reserve currency are and are not, and whether or not they’re worth the costs.

We could assess whether the global monetary system we set up is achieving what we mean for it to achieve and still benefitting the United States and its citizens more than it is harming them. We could argue about the nature of the dollar as a fiat currency and the Nixon shock (55 years ago yesterday), the value of the United States as a global hegemon in constructing the post-WWII world order, the legacy of liberal hegemony and the international monetary system, the challenges we faced then and that we face now, and what we want the future to look like.

Me personally, I take the latter position, and argue in favor of a denationalized sound money system. And here’s the thing—I’m not more intelligent or smarter than most of the other people posting about this. I certainly don’t have the titles, accolades, degrees, or other fancy certificates and letters next to my name that typically convey authority. That’s what drives me nuts. I’m not even the best person to make my own argument in this debate—but at least I know the debate is there to be had. At least I understood what Vance said—and recognized it was itself a liberal argument.

It’s one thing to say something stupid on social media. The powers that be know I have, and I probably will again. But it’s quite another to pile-drive a political message about a position that wasn’t taken in an argument you either don’t understand or won’t acknowledge as itself liberal—no matter how many illiberal people repeat it, too.

When the response by so many liberals is, “No, Vance is bad, so anything he says must be bad,” you give him the power to define liberalism for you by defining liberalism in contravention of whatever he says. And that’s a recipe for losing not only the plot, but the entirety of what liberalism and liberal ideas helped build, anyway—even if you win the meme battle on X.

If we’re going to have this argument, let’s actually have the argument. Liberals’ commitment to truth and transparency can’t be protected by straw man arguments or ignorance of their own intellectual history.

Just as the ends don’t justify the means, you can’t sacrifice your own intellectual heritage to save your own intellectual heritage. Liberalism deserves better.

Image created and generated by Cameron Vaské with Grok.

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Edits & Corrections:

08.16.2026 | 3:31 PM ET
An earlier version of this article claimed that: “So how am I so sure this isn't some postliberal voodoo nonsense? Because Vance wasn't the first to say it—Robert Triffin was,” and that, “As Triffin argued, American business and labor would have a harder time competing with the rest of the world over time, likely leading to the erosion of the productive and industrial parts of the U.S. economy that made the U.S. dollar strong and worth holding as a global reserve currency.”

This is meaningfully incorrect. Triffin’s argument was centrally about the balance of payments in gold terms under Bretton Woods, not about domestic productive capacity. Many economists, many of them liberals, have subsequently made the latter argument as an extension of Triffin’s dilemma.

This article has also been updated to offer valuable context on additional economic commentators and economists who debate the issue of global reserve currency status and the Triffin dilemma.

08.23.2026 | 9:40 AM ET

An earlier version of this article states that Josh Reed Eakle is “someone I otherwise tend to find quite thoughtful and poignant,” and noted his work (implying also his posts) is “often substantive.” Recent sweeping statements have given me pause, and I no longer feel I can claim these statements broadly in good conscience.

The Haunting of the Wealth Inequality Debate.

The current debate about how to address wealth inequality is dominated by discussion of what to do about the wealth that currently exists, and generally focuses on the wealth that’s concentrated in the top 1% or top 10%. Almost none of the mainstream conversation addresses how wealth is created or how our monetary system actively redistributes it. Which is to say, the entire conversation is dominated by discussions about taxation.

Californians are set to vote on a wealth tax in a ballot measure in November this year which would apply a one-time 5% tax on the net worth of the state’s billionaires (though critics claim this could be higher). Earlier this week, President Donald Trump announced he was exploring ways to index capital gains taxes to inflation—effectively looking to remove the “additional” tax paid on assets as inflation raises their nominal value. (E.g., You buy a house, the dollar loses value, then you sell the house; the house stays at the same value but the cost in dollars goes up, so you pay more.)

Some argue in favor of a wealth tax. Others argue for higher capital gains taxes and a few even argue for unrealized capital gains taxes. Good faith advocates of each of these policies are looking for ways to enable the working and middle classes to accrue wealth while limiting the excesses of wealth in the economy and maintaining fairness.

Almost the entire wealth inequality debate is about how to redistribute wealth after it’s already redistributed through Cantillon effects, and does nothing to actually retain the value of salaries already negotiated, wages being earned, and savings already accrued by everyday people. The debate is effectively about re-redistribution. Yet almost nobody seems to be seriously examining one of the core, structural causes of wealth inequality: the creation and flow of new money.

It is on this topic that the ghost of Richard Cantillon would like to have a word. The French-Irish economist, born in the 1680’s in Ireland, noted that where the new money enters circulation matters. In the modern-day discussion of wealth inequality, his ghost is haunting every town hall, campaign speech, social media post, and op-ed.

We would do well to listen.

It was a dark and stormy bond market.

It’s (pick any year in the last 20+ years) and the U.S. Congress has passed a budget that requires the United States to spend at a deficit—spending more money than the government takes in in taxes and other revenues. Where does the additional money come from?

Part of it comes from organic buyers—institutions, foreign nations, and individuals purchasing U.S. debt for the promise of future interest. But when that demand isn't enough to cover the deficit, the U.S. Treasury sells the remaining debt to Primary Dealers (large institutional banks) at auction.1 If the Fed then wants to expand the money supply, it buys those Treasuries back from the banks on the open market—crediting the banks with new cash reserves that didn’t exist before.

This process expands the money supply by expanding the Fed balance sheet. In essence, the Fed creates new money and issues it to banks. New money can also be created by fractional reserve banking practices—essentially, creating new money by lending out more than the bank has to meet all claims.

Expanding the money supply is a main driver of inflation. In simple terms, you get “more money chasing the same goods,” which eventually causes a persistent increase in prices—inflation.

But that inflation doesn’t just kick in everywhere all at once the second you create new money. It’s not like the Fed buys U.S. treasuries today and tomorrow grocery and gas prices are X% higher. That money hasn’t entered circulation yet. It’s not yet out there in the economy doing money things.

Remember—we just created new money that didn’t exist yesterday.2 Prices haven’t caught up yet. So, whoever gets that new money before prices catch up gets to spend it at today’s purchasing power—how much a dollar can buy.

So where does that newly created money actually come from and where does it go from there? It starts at a bank—whether a central bank or private bank,3 and then cascades down and outwards towards the rest of the economy.

Following the money.

You’ll frequently hear people repeat the axiom, “Follow the money.” Popularized by the 1976 film All the President’s Men, it’s often employed as an argumentative case for why an actor engages in X or Y corrupt behavior. However, in this instance, following the course of newly created money shows us that the systems we designed are systematically enriching some while disadvantaging others without anyone trying.

Let’s follow a new U.S. dollar created by the Federal Reserve to help finance a budget deficit—maybe for COVID stimulus spending or for a new Abundance agenda big ticket infrastructure bill, or simply in the regular course of U.S. overspending.

The first to get the money is the central bank—in this case, the Federal Reserve. Our dollar begins its life as debt on the Fed ledger and gets issued to a Primary Dealer—made up of mostly big, institutional banks. The central bank and the biggest commercial banks are the first to benefit from our new money.

The big banks can use the dollar many ways, or save it as reserve cash for withdrawals. If they spend it, they might loan to or buy assets from:

• investment funds, hedge funds, pension funds, and institutional traders;

• (mostly) large businesses and corporations and their shareholders; or

• homebuyers, developers, and real estate investors and brokers.

Notice who gets first access—banks, wealth managers, big business, market makers, and asset managers. It’s here that the dollar starts to circulate meaningfully and begins to lose value while also, critically, inflating asset prices.

Everyone holding assets—particularly scarce assets with relatively fixed supplies—sees the value of those assets increase, even beyond the effect of inflation, whether or not they touched our new dollar.

The new dollar then very likely bounces around between funds, traders, businesses, corporations, shareholders, real estate brokers, and banks several more times before it eventually goes into an account that issues a paycheck to someone, or is withdrawn.

By the time it gets to our wage earners, inflation has begun to kick in—more money chasing the same number of goods (and services) has caused them to increase in value—and not just assets. As our new money starts doing money things—circulating in the broad, broad economy for coffee, your grocery bill, that new pair of shoes you bought, whatever—it loses more.

Critically, not only has the new dollar lost value from when it was first created, all dollars have lost value—a process called currency debasement—including existing wages and savings in dollars.4

This is the crux of Cantillon’s observation in his famous Essai sur la nature du commerce en général (Essay on the Nature of Trade in General), and is commonly referred to as the Cantillon effect, or Cantillon effects. The most oft-quoted passage highlighting this contribution goes as follows (broken up for ease; emphasis added):

What Cantillon is saying here is that if newly-created money (in his time, in a silver or gold mine) enters circulation, the first to get the money get to spend more, followed by those who they spent it with, and so on down, causing prices to increase after they’ve spent it. The everyday people that are last to receive or use the new money—the “landlords during the term of their leases,” “their servants,” and “people or workers on fixed wages on which their families depend”—take the hit.

(Mind you, Cantillon was a mercantilist and believed in a zero-sum economy, incorrectly concluding that any increase in spending in one place must result in less spending in another. However, his observation of the Cantillon effect named after him—that the creation of new money has different effects on wealth depending on its entry point and flow throughout the economy—is one that many economists have since recognized and discussed widely.)

The result of these Cantillon effects is that, without anybody doing anything for any other motive other than normal, everyday economic activity (good or evil, virtuous or villainous) we systematically and structurally make the rich richer and the poor poorer relative to each other—even as the rising tide lifts all boats. In recessions, it’s often the case that the poor do indeed get poorer, nominally, as well.

Creating structural wealth inequality.

In the United States, like in all other modern countries, we use a fiat currency and have a fractional reserve banking system. The combination of these—in particular the democratic incentive to run persistent deficits with a fiat currency—is precisely what is reliably causing the money supply to expand faster than the economy grows.

Think about that: It is quite literally the structure and nature of how modern money and banking work that reliably creates wealth inequality. This is by design—it requires no ill intent, greed, or malice (even if those exist, too). Even if everyone was a good actor, we would still get this effect.

I want to labor on that point a bit. If you hold scarce assets at all—without doing anything else whatsoever and all else being equal—you can’t help but get wealthier when the money supply increases. In fact, the only way the rich could avoid getting richer in this system is to intentionally get poorer by selling their assets to someone else and holding cash. Which, surprise surprise, the wealthy largely avoid.

Nobody and everybody are simultaneously at fault here. Everyone just doing what they’re already supposed to do causes this problem repeatedly and reliably.

How Bad is it, Really?

Short version: It’s bad. If you look at nothing else in this section, look at this—the expansion of the money supply for the U.S. dollar.

It’s a lot. If we overlay that graph with the accumulation of wealth in the United States by wealth percentiles—top 1%, 90-99th percentile, 50-90th percentile, and bottom 50%, it looks like this:

It’s no coincidence that the wealthiest 50% of the country get wealthier as the money supply increases while the bottom 50% fail to catch up—the bottom 50% are our “workers or people on fixed wages on which their families depend,” and tend to have few assets that outpace or resist the effects of inflation, whereas the top 50% are able to store value—their wealth—in assets that do.

In a very real, systemic way, we are siphoning value from those who earn and hold U.S. dollars to those who have assets—without even intending to.

If you’re savvy with data and graphs, you might be asking if the data supports more than just a correlation. (If ye be undeterred by scary graphs and would like a slightly deeper dive into the correlation, data, and observable Cantillon effects, keep an eye out for my follow-on article on this, which will also be linked here.)

At this point, a very reasonable, rational question would be, “Why—why—are we doing this anyway?” (Possibly at an elevated volume.)

Why are we doing this, anyway?

It’s worth noting at this point that the Federal Reserve’s task is to create and control inflation and manipulate monetary policy to target economic outcomes, such as maximum or “full employment.” Yet, many have speculated that the Federal Reserve had quietly given up on targeting inflation. For good reason. The Fed has failed to meet its own stated 2% inflation target for over five years.

Ironically, in prior years, the Fed was concerned about low inflation—as was the Bank of Japan, the European Central Bank, and other central banks globally, which all sought to create greater inflation through expansionary monetary policy. In 2019, Jerome Powell announced that low inflation was “one of the major challenges of our time.” Lyn Alden nails the irony pretty succinctly:

It’s not a one-off statement, either. At many points throughout even recent history, the Fed and other central banks have often bemoaned low inflation, resolving to increase it. This is policy—it’s how policymakers and advocates attempted to reconcile neoclassical economics with Keynesianism in the “Keynesian synthesis” of monetary policy. Inflation is an intended result.

The tradeoff is that we expand or contract the supply of money to better absorb economic shocks from business cycles and simultaneously avoid either rapid deflation or prolonged unemployment. The idea is that we have tools to actively manage the economy and control inflation, encourage economic growth, maximum employment, offset negative shocks, and (as needed) bail out critical industries, all while avoiding excessive inflation or rapid deflation, high unemployment, bank runs, and systemic economic disasters.

So, how’s that working out?

Setting aside (for now) the argument that our monetary system actually creates the conditions for the economic shocks by artificially setting low interest rates, forcing credit and speculative bubbles—like those observed in the 2001 Dot Com crash, the housing market leading up to 2008, or even today in the AI hyperscaler bubble and private credit markets—the modern monetary system under Keynesian synthesis isn’t even meeting its own goals.

Here’s the money supply (M2) against GDP (and real GDP, for idle comparison), indexed to be the same level at 1959 (earliest data for M2) so we can see how closely the growth of each has tracked over time:

And here’s the unemployment rate (right) overlaid with the growth of the money supply (M2) (left):

Let’s take these in the most positive, charitable light first:

The M2 and GDP track closely until beginning around the late 1980’s. By the 1990’s, GDP was actually outpacing M2 growth—which maps well to the Dot Com boom (and bust) era. Nominal GDP growth outpaced M2 until the Global Financial Crisis in 2008, and is still directionally correct afterwards. The unemployment rate ebbs and flows with business cycles, but usually within ~5%. The rapid increase in the money supply from 2020-2023 correlates closely with falling unemployment (even though COVID-specific restrictions were also being slowly removed during part of that time).

Monetary policy under a fiat currency would appear to work from these graphs—and graphs like these (though many more, and more complicated) are often what macroeconomic policymakers use as the basis of a defense for fiat currencies, fractional reserve banking, Keynesian synthesis, and post-Keynesian synthesis monetary policies and to assess the effectiveness of their policymaking.

All the while, the Cantillon effect is still redistributing wealth, however. The context around these graphs and their own aberrations deserve at least brief attention in our discussion, however:

• The post-1980s Volcker shock to break high inflation—which allowed interest rates to spike as high as 21.5% in 1981, resulting in a severe recession—realigned M2 with GDP growth and did fix inflation. However, this was famously an aberration from the prescribed policies of the Keynesian synthesis—which posited by way of the Phillips curve that, in effect, you should not get high unemployment and high inflation.

• The Fed puts the unemployment rate somewhere between 4% and 6% of the labor force at “maximum employment,” which it defines as “the highest level of employment the economy can sustain over time without leading to excessive inflation.”

• The unemployment rate itself does not account for those who are considered to have been unemployed so long, they are no longer part of the labor force, even if they’re looking for work, nor does it account for underemployment. In other words, the effective rate of people without jobs that want one can be and sometimes is much higher than the unemployment rate.

• None of these graphs account for inflation, save our graph of real (i.e., inflation-adjusted) GDP growth. They also don’t take into account the federal debt (which alone now costs the public over a trillion dollars a year in interest), the financialization of the economy, or the way costs of living—housing, education, childcare, healthcare—are outpacing official inflation.

Even taken in the best light, our current monetary system derived from Keynesian synthesis isn’t meeting its own objectives and fails to meet a plethora of others. But this is not an article about employment, debt, GDP, or the cost of living—it’s about wealth inequality. The point being made here is that even by its own standards, the current monetary system isn’t delivering—and is still creating wealth inequality, constantly and systemically, through the Cantillon effect.

There is no easy way out.

Regardless of whether we tinker with taxes on capital gains, wealth, income, or just about anything else—the Cantillon effect will continue to concentrate wealth in certain sectors and asset holders and reduce it for the working and middle class.

“Re-redistribution” through taxation cannot get specific or dynamic enough to track the specific and effective accumulation of wealth—which changes based on many and various factors across a plethora of actors at multiple strata, and at different times. We need to address the root cause of perpetual and systemic wealth inequality.

To wit, there are three main categories of options:

1. Practice fiscal responsibility. Keep the fiat currency system and rein in government spending to keep the budget balanced, minimizing the expansion of the M2, accepting some constant wealth accumulation.
   
   This is politically challenging in the extreme, since democratically-elected candidates have every incentive to promise more welfare spending and fewer taxes to win office—particularly when the public does not understand the core problem, Cantillon effect, or its causes.

2. Transition to sound money. Encourage a safe and institutional U.S. transition to a sound money system in which the supply of money is fixed to a commodity (or set of commodities). Accompany it by enabling the bottom 50% to accrue sound money and hard assets to moderate wealth inequality in the interim.
   
   The transition is both economically and politically challenging, because we can’t flip a switch and go back tomorrow; the United States would in all practicality be forced to immediately default on its debt if it attempted to re-peg the U.S. dollar to a hard asset today. Any attempt to transition back to a sound money system would require a long-term plan for fiscal responsibility and a sequential transition of regulations, banking, and financial systems.

3. Maintain the status quo. Accept the current status quo, either as-is or while attempting to redistribute the wealth—however unevenly—anyway through high taxation on capital gains, net worth, and other methods.
   
   This is politically easy—and importantly, temporary. Some of that wealth will be captured and redistributed effectively; some will not. Those with capital—wealth—will slowly (then suddenly) migrate it to jurisdictions with less tax burden, depriving some regions of wealth that was already redistributed towards the top while further concentrating it elsewhere.
   
   And it doesn’t last forever. Either populist pressure or a U.S. debt default will break the status quo eventually.

The only one that is easy to do is to keep pretending like the problem doesn’t exist until everything breaks and then to point fingers. Today’s politicians are very good at that. And public debate around this issue is almost non-existent.

Listen to Cantillon’s Ghost.

You can think the ultra-wealthy have too much and argue in favor of re-redistribution, think Congress just needs pressure to adhere to a debt limit to balance the budget, or argue we shouldn’t redistribute anything. The money printer doesn’t care what your politics are. It doesn’t care if you want a state-run grocery store, Medicare for all, a big state-funded infrastructure program, to DOGE the government, or want to privatize all the things.

And that’s the point.

Cantillon effects keep happening quietly, all the time, whether or not we tax and “eat the rich,” ignore them, or put them on pedestals. The economics behind the monetary system we have don’t care whether you believe they happen or not or whether you think markets are just or rigged. It runs because of how and where new money enters an economy, not because of who’s currently in office or which party controls Congress.

That’s what makes wealth inequality structural rather than political. The current wealth inequality debate, for all its energy, is arguing about who gets the dry seats on a sinking ship. It’s quite literally the creation of new money, not old money, that’s creating and exacerbating wealth inequality.

Taxation debates fight over redistributing wealth that has already been redistributed—upstream, quietly, every time the money supply expands faster than the real economy grows. You can raise the capital gains rate, pass a wealth tax, index capital gains to inflation—and the Cantillon effect will still be there tomorrow, next week, next quarter, next year, moving value from wage earners to asset holders, because none of those policies touch the mechanism that creates the imbalance in the first place. They only chase it after the fact, and they’re always a step behind.

I can already hear the comments pointing out many other issues that cause and exacerbate wealth inequality. But it’s like complaining about someone spraying you with a water gun while standing in a rainstorm—technically correct, and it still doesn’t matter as much as the fact that it’s raining.

The honest options aren’t really “left” or “right” policy positions as we think of them in the modern debate. They’re structural reform choices about whether to address the cause or keep managing the symptom.

You can practice real fiscal discipline—shrink the deficits that force the money supply to expand faster than the economy does, and accept that this alone won’t eliminate Cantillon effects, only slow them. People will be mad about politicians’ broken promises and call it austerity. They’ll be right to be mad. It will still prevent worse things from happening. But things won’t be as bad.

You can go further and rebuild toward sound money. Create a system where the supply of money isn’t a policy lever in the first place, undertaken deliberately and over time, because there’s no version of this that happens overnight without a default. Money will hold its value. People will be mad about the broken promises, call it austerity, and call it greed to base the currency in something that the poor and middle class tend to have less of already. They’ll still be right to be mad. But things can slowly get better.

Or you can do neither, and keep re-redistributing—or not—after the fact while the underlying imbalance compounds and eventually breaks the whole system. It isn’t a strategy so much as blind hope that the problem resolves itself like magic because we just really want it to. People will feel justified. They can be angry at who they’d prefer to be most angry at and blame who they’d most like to blame. Things may even get better for a short while. But they will not get better for long.

You don’t have to adopt any one preferred solution to see the mechanism at work. But you can’t credibly debate wealth inequality without accounting for it. We can all extend and pretend, just like the credit markets do, until things go bust. We can ignore Cantillon, and spend another few billion dollars arguing about how to re-redistribute wealth in the economy while the ship takes on more water.

Or we can listen to Cantillon and find a way out of the haunted wealth inequality debate we've been having—and have a real debate about how to fix what’s broken.

I choose the latter.

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Several weeks ago, I had the pleasure of accompanying a friend to Welcome Fest, so named for the organizing Welcome PAC. It’s the second time the annual meet-and-greet has been held, organized by center-left Democrats to bring together the more moderate elements of the party. The convention was jam-packed with events, with three different sessions happening simultaneously throughout the day, covering everything from State and local politics to economic stimulus and healthcare policy.

Yet what took center-stage throughout the majority of the event, both metaphorically and programmatically, was the policy agenda of “Abundance,” originally laid out by Ezra Klein and Derek Thompson in their book by the same name. For the unfamiliar—the agenda is poignant and introspective, critiquing Democrats for frustrating economic growth and business development by making regulation overly burdensome and complicated, and argue that liberals have too often emphasized process over results. It is a supply-side liberal attempt to address the “Affordability crisis” plaguing America.

Klein, Thompson, and other Abundists, as they are sometimes called, argue that liberals should return to the economic policymaking that made them the party of the working class under FDR, and argue for a modern-day New Deal. Underscoring the point, The New Deal network was in attendance at Welcome Fest along with Inclusive Abundance, Third Way, and The Center for New Liberalism. In fact, the I-95 Philadelphia rebuild in 2023-24—state-led and government-financed—is heralded as a flagship example of what government spending can do, harkening back to the build-out of the Interstate Highway System.

Abundance Democrats are critical of progressive zoning boards, environmental reviews, and permitting regimes that have made it slower and costlier to build a home, a solar farm, or a rail line (as in the infamous case of California) than in almost any other developed economy. Klein and Thompson's diagnosis isn't that government has grown too large, but that that government has tangled itself in its own rules until even its own priorities can no longer clear the hurdles it built around them.

The Abundance agenda prescription follows from that diagnosis: not less government, but a faster, more efficient, and capable one, willing to deregulate where regulation has become the obstacle, and willing to spend, subsidize, and build at a scale reminiscent of an earlier era's public works, in service of the affordability and infrastructure liberals and moderate progressives alike already say they want.

It is an ambitious, two-part reform agenda, and one that appears to be breathing new life into the liberal wing of the Democratic party. Much of the agenda’s intended outcomes are worthwhile and broadly shared across the public: more affordable housing, better and renewed transportation infrastructure, energy grid modernization and expansion, and more opportunity for small and mid-sized business development.

Abundance advocates get the institutional diagnosis right—procedural paralysis, veto points, and institutional calcification around rules and memos do appear to have mired government in a procedural morass. The underlying problems that Klein, Thompson, and others highlight in housing permitting costs and delays, a stalled energy infrastructure buildout and grid expansion, and stagnating return on investments in science are real, solvable, and worth solving.

Yet for all the bright ideas that abound in the Abundance agenda, scant attention has been paid to one rather large and insistent problem its proponents face: Where does the funding for Abundance come from?

The Field of Abundance

Abundance thinkers tend to argue that deregulation provides the means for business to grow, and that between “government getting out of the way,” procedurally, modest tax increases, and direct government funding of public works, the economy will grow enough to make up in revenues what it spends to achieve abundance.

While the directional logic that tax revenue can increase with deregulation and public spending, the claim appears to be that “it pays for itself”—where Abundance advocates address funding at all. The numbers around this question are fuzzy and contested at best and mostly absent from Abundance writers’ work.

Setting aside the task of peering into the crystal ball to determine net tax revenue from the resulting business growth, the Abundance program requires real government money today. Where it comes from is not a tangential question, and there are fewer options today with more serious consequences than in decades past. It’s also a question we have yet to see many Welcome Fest–goers or Abundance thinkers address holistically.

In FY2025, the U.S. federal government ran a fiscal deficit—spending more money than it receives in taxes and other revenue—of 1.78 trillion dollars. The lowest it’s been in the last five years is 1.38 trillion dollars in FY2022, and in the last three administrations, 670 billion dollars in FY2017. The gross national debt (total sovereign debt) is now at a staggering 39 trillion dollars and climbing as of 2026. Public debt—not counting intragovernmental debt—topped 31 trillion dollars in 2026, marking a 101% public debt-to-GDP level that made national headlines.1

The Congressional Budget Office’s February 2026 report shows the U.S. deficit on track to reach 3.1 trillion dollars by 2036, with the sovereign debt skyrocketing to a 120% debt-to-GDP ratio. Some estimate the U.S. debt could top 50 trillion dollars by 2030.

If the answer to “Where does Abundance come from?” is increased taxes, then, ostensibly, the effect on the deficit and debt would be net zero—except that the cost to businesses and individuals of those taxes will be to divert money from other spending and savings, at minimum in the short-term. That could itself reduce tax revenue and slow economic growth. Moreover, it would also hit an already-strained middle and lower class particularly hard—quite the opposite of Abundance’s stated affordability goals. There simply isn’t enough wealth in the tax base—even among the top 1%—to make up the difference.

If the answer is deficit spending, we could expect those numbers to go up further, faster—possibly a lot faster. And that has real consequences for Abundance thinkers, because it actively works against the affordability, state capacity, wealth inequality, and economic growth goals of the Abundance agenda.

Diminishing State Capacity

Perhaps the most immediate and ironic impact of an Abundance deficit would be the accelerated destruction of state capacity to implement the agenda that champions state capacity. As the national federal debt has ballooned, interest payments on that debt have grown to 990 billion per year, becoming the second largest spending category of the federal budget—overtaking defense spending and Medicare, and on track to overtake Social Security. The Committee for a Responsible Federal Budget projects that net interest payments will double by 2036 to 2.1 trillion dollars per year.

This is not a small problem for Abundance thinkers—interest payments are now so large, they are crowding out state capacity to spend on anything else. It’s like running up all your credit card debt so high that your interest payments are forcing you to cut your grocery budget, even as your grocery budget adds more debt—and interest on that debt.

If Abundance’s public works spending is meant to direct spending projects at the scale of the the Interstate Highway System (IHS), that spells major deficit spending. Initial estimates for the IHS ran at 27 billion dollars. Adjusted for inflation since 1955, that’s roughly 338 billion dollars today. Estimates on IHS spending undershot the total cost, which ran around 41 billion dollars in total—some 513 billion dollars today.

While the buildout of the IHS certainly drove economic growth and capacity, there is a sunk cost up-front that requires massive spending and continuous maintenance costs thereafter. The transmission from those costs to the debt and interest payments will crowd out future government spending and seriously diminish state capacity, as excess deficit spending already has.

One need only reflect for a few moments on an infrastructure and housing buildout with a budget eaten up by interest payments midway through its implementation before it conjures images of bridges halfway built, roads that run out of pavement, or housing projects that don’t get finished.

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Ballooning Inflation

It’s no secret that center-left Democrats broadly, and many Abundance liberals, generally, are concerned about inflation. It’s the core concern among those talking about “affordability” and a core reason that Abundance advocates want to jump-start economic growth through state spending. What does not yet appear to be in many Abundance thinkers’ frame is where the inflation is coming from.

Progressives often argue that inflation is being driven by greed, leading many to the portmanteau “greedflation.” It’s a convenient narrative, because there’s a small measure of truth to it—companies in less competitive (and therefore less truly capitalist) markets are able to hike prices higher to maximize profits.

But greedflation doesn’t come close to accounting for increased prices at the grocery store, let alone the broad inflation in prices across the economy and lost purchasing power that the U.S. dollar has faced. The notion that corporate greed alone has driven sustained price increases across the board is broadly a myth, albeit a popular one.

Often, those who argue that greed is the source of inflation confuse revenue for profits, or cherry-pick data highlighting nominal increased profits from companies unadjusted for inflation against inflation-adjusted wage growth (such as the graphs in this Guardian article). That kind of comparison is roughly akin to arguing that a worker who made $50,000 in 2000 and today makes $100,000 has had a profit increase of $100%, ignoring the lost purchasing power of the dollar over that time or the changes in sector-specific costs.

The U.S. dollar has lost 97% of the value it had in 1913, and roughly 50% of the value it held in 2000. The reason why is a lot simpler, and the essence can be reduced to a high school economics 101 course: supply and demand. [Here, I’m intentionally oversimplifying to make a point, but the point stands.]

Like goods and services, there is a supply and demand for U.S. dollars. Today, when the federal government spends at a deficit, there are, broadly speaking, two main ways to pay for it:

1. get foreign entities or private individuals to loan you money in return for interest on the loan (bonds); or

2. issue that debt directly to the government’s own central bank (the Federal Reserve), and create new money in the process.

When there aren’t enough private buyers for federal debt, the Federal Reserve buys Treasuries, earning it the moniker “buyer of last resort.” In doing so, it increases the supply of money while the demand for that money remains relatively fixed. As a result, the value (purchasing power) of that money declines, creating a persistent general increase in prices. This is more properly inflation by its textbook definition, sometimes specified as “monetary inflation.”

Not all stimulus spending need be inflationary, but stimulus by deficit-financed monetary expansion must be.2

If Abundance programs spend at a deficit to drive economic growth to combat the affordability crisis, they will also require a massive expansion of the monetary base and drive inflation even higher, exacerbating the very problem they were designed to combat.

It’s almost like Chalooby—the slime monster with the mop from Monsters, Inc. Everywhere he goes, he’s diligently mopping up the floors, trying to clean them, but leaving more slime behind him once he’s finished. Rather than solve the problem of affordability, Abundance deficit spending would, at the very best, continue to cause a core part of the problem it seeks to solve.

Spiking Wealth Inequality

Monetary expansion to fund deficit spending doesn’t just create inflation—it dramatically exacerbates wealth inequality, a core issue fueling populist progressive politics.

Named after the Irish-French economist who first identified it, the Cantillon effect describes how new money doesn’t hit everyone equally, or all at once. The first recipients—the Federal Reserve, big banks, big business—spend it before prices adjust, getting full value for it. By the time it filters down to everyday consumers, dollars everywhere have already lost purchasing power, including the ones sitting in a savings account.

That gap compounds for those who already have wealth. The top 10%, big businesses, and big banks aren’t just closer to the new money—they also hold assets they can borrow against, letting inflation quietly devalue their debt while those same assets appreciate in the very currency losing value. They reinvest the gains into hard assets and leveraged positions built to outpace inflation, while everyday Americans—stuck renegotiating wages at a disadvantage, without inflation-resistant assets of their own—absorb the hit in savings, wages, and rising prices.

It’s essentially the reason trickle-down economics never worked.

You’re Right, It is the Economy

At the forefront of the liberal, center-left brigade of names at Welcome Fest was James Carville, who famously quipped, “It’s the economy, stupid.” It became a de facto slogan for Bill Clinton’s Presidential campaign in 1992. Arguably, those four words could also replace half of the autopsy report that the Democratic party initially refused to release on it’s 2024 Presidential loss to President Trump.

That simple, but sharp political logic is the crux of the Abundance agenda, a good part of the impetus for the creation of Welcome PAC, and the driving force behind the center-left’s renewed urgency and sense of self. For all its brilliant thinkers focused on the politics of an economic message, there appear to be scant few addressing the economics of its proposed policies.

Those that do, in fairness, are paying attention to several of these issues. May’s news that that the national public debt surpassed the 100% debt-to-GDP ratio seems to have redirected their attention to the deficit.

Derek Thompson dedicated a May 2026 episode of his podcast to a discussion on the national debt with Justin Wolfers under the the title, “Does Anybody Know How to Solve an American Debt Crisis?” The conversation featured a real, introspective look at how Democrats dismissed fiscal hawks’ concerns for years. Thompson and Wolfers identified the squeeze on the federal budget from interest payments as a concern for state capacity.

Matthew Yglesias—another sharp center-left thinker—wrote an article on his Substack in May 2026 titled, “Time to freak out about the national debt.” In it, he highlights that pandemic spending drove deficit spending and calls out the strain in bond markets in both the United States and the United Kingdom:

Noah Smith—a center-left economics writer arguably adjacent to the Abundance crowd—penned a May 2026 Substack article titled, “America is heading for a debtpocalypse.” In it, he directly calls out deficit-driven inflation and the rising cost of servicing U.S. debt.

Directionally, what Smith, Yglesias, and Thompson are arguing is that Congress must make hard choices to balance the budget or at least operate at a very low deficit to minimize inflation. In fact, the Abundance agenda is also home to those who argue that fiscal policies have abandoned the young and working class, and argue fervently and coherently for a balanced budget.

Yet this diagnosis appears at odds with parts of the Abundance agenda itself, which would require a great deal more state spending. That means either a tax hike or seriously cutting spending from existing programs to get a balanced budget—both of which are particularly politically challenging—or running an even bigger deficit.

It also abandons the constructive institutional critique and logic that pervades the Abundance agenda more broadly. Congress is unlikely to balance the budget on its own when elections are competitive because raising taxes and cutting spending—particularly for expensive benefits—tends to be a highly unpopular political message. The incentive to ‘cheat,’ in game theory terms, on a balanced budget to win an election for a political office are stacked against fiscal responsibility advocates (and further enabled in a fiat currency system).

Abundance is far from impossible to achieve, but its ends require different means. A farmer cannot simply will crops into existence.

Harvest Requires Planting

I’ve spent a large portion of this article critiquing the Abundance agenda and the center left—and for good reason. If the point of Abundance is to energize the economy, uplift the average American household, and champion state capacity, and its implementation does exactly the opposite, it is worth being clear about that.

Yet practically, it is one of few positive visions for America’s economy being discussed today. It is genuinely worth engaging with, arguing about, and ideating over. Not every part of the Abundance agenda requires outsized federal or state spending. Certainly, many parts of it are simply aligned with making economic activity easier and more fruitful in the United States.

It would likewise be remiss and unfair to not point out that there are a plethora of sharp minds and policymakers within the center-left that are serious about calling out the national debt, deficit spending, and addressing the gap between Abundance’s goals and its implementation. Those voices should be heard louder and those issues taken more seriously if the Abundance agenda is to gain traction and achieve its goals.

Thoughtful and sharp minds like Adam Michel and Veronique de Rugy at the Cato Institute and the Mercatus Center, and others, have written and spoken extensively in productive critique of the Abundance agenda, and deserve greater attention as well. If Abundance can be achieved in a fiscally sound way, it would go a long way towards renewing American growth. De Rugy in particular has been writing in favor of an abundance agenda since 2023—prior even to the 2025 book by Thompson and Klein.

As I have tried to argue here, if we are to harvest Abundance, we must first plant its seeds. Abundance can no more be legislated into existence than affordable housing can be written into being. It is the central argument between progressives and liberals, and one that I think the center-left takes on in broadly good faith.

Abundance advocates have already identified much of the “tilling”—the deregulation, permitting reform, and regulatory clarity needed to break apart the soil to make it easier for economic growth. That is genuinely a good place to start.

Equally useful would be to streamline and clarify the tax code—something that the New Liberal Action Summit’s panel on fiscal policy smartly noted would be both politically popular and practically useful. As de Rugy also argues, heavy taxation—particularly on saving, capital gains, dividends, and business income—would also stifle the new growth that Abundance advocates hope to encourage, and therefore, should be avoided.

The analogy still holds; plants do not grow faster when you siphon the moisture from the ground to water them. Likewise, plants need a nutrient-rich soil to grow in and to be seeded. If Abundance Democrats are truly keen on affordability and economic growth, they must be willing to champion everyday Americans’ ability to accumulate and deploy capital—without creating further market distortions.

There are many ways and various tradeoffs that can achieve this—such as making tax-advantaged saving easier for the average American, making it easier to start a new business, or reforming occupational licensing. Those are debates worth having.

Above all, Abundance created by deficit-spending that expands the money supply should not be treated as a viable solution. Let it not be funded by stripping the ground of its nutrients, water, and seeds but by tending to it to create fertile soil for American prosperity.

Image created and generated by Cameron Vaské with Grok.

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Much has been written in the media and spoken from the pulpit about the “dignity of work.” Not just in magazine and newspaper media, but on social media, from talking heads on TV, and on posters and banners in protests. But what does it actually mean?

To many centrists, conservatives, and libertarians, this is a “magic word” or phrase—feel-good language devoid of meaning, specific policy agendas, or any intellectual backing. To those honestly using the term among the broad left, it means many and sometimes conflicting things, but it is more fundamentally understood as an argument to regain what many feel is missing from work: a sense of dignity.

I’ve frequented left-leaning social circles, policy orbits, and channels for a long time. While I can’t speak for everyone, here’s what the average person means when they say dignity of work:

• earning fair wages for work that provides real value;

• working a reasonable number of hours to afford to live; and

• working in a reasonable environment with reasonable benefits, such as sick leave, reasonable notice for scheduling, and time off.

Some add more to this, including advocating against shaming poverty or unemployment as personal moral failures wholesale and arguing for stronger union protections and a voice at work. The core of the meaning, however, is about being able to provide for oneself through hard work without that work being endless, demeaning, and lacking accommodation for normal human needs.

This is not really partisan, but it gets lost in translation. Though I suspect the broad right would likely frame this same idea in terms like “earned success” or “self-reliance,” the concept is the same—the belief that Americans should be able to work hard and earn enough to live reasonably well from that work, raise a family, own a home, enjoy life, and eventually retire. To work to live a normal, “dignified” life, both in and outside the workplace.

What’s absent from the broad discussion of “the dignity of work,” as it is from “earned success,” is why we lost the capacity for it and how to get it back. Because there can be no true dignity of work, self-reliance, or earned success when the money you earn loses its value by design.

Inflation is built into how our money works—our monetary system—but it wasn’t always this way.

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Inflating Away Dignity

People think of inflation as the cost of things going up. Eggs, milk, bread, cellphone plans, cars, and houses. Inflation causes the prices of those things to go up, but that’s not inflation, exactly. That’s price inflation, which is often caused by monetary inflation. So, what is monetary inflation?

Monetary inflation is caused when we create more money, which causes the cost of things to increase in terms of that currency. Economics 101 teaches you about supply and demand, and we often teach it in terms of apples and oranges. What you may not have thought about is that there is also a supply of and demand for money—of and for U.S. dollars. There’s only so much currency to go around, and people need it to exchange for things like eggs and cars and houses and tickets to a baseball game or concert.

At the start of the year that I was born—1997—there were roughly 3,835 billion U.S. dollars in broad circulation,1 according to Federal Reserve Economic Data (FRED). At the beginning of 2026, there were roughly 22,429 billion U.S. dollars in broad circulation—almost six times as much.

If you were paid $50,000 in gross annual income in 1997, you made good money. If you get paid $50,000 in gross annual income today, you’re barely scraping by. A large part of that is because of monetary inflation. The purchasing power of the U.S. dollar has actually halved since then—to afford the same goods, services, and quality of life making $50,000 in 1997, you need to make roughly $101,000 in 2026. (And even that understates it once you account for how much faster housing, healthcare, and education have outpaced overall inflation.)

Why isn’t it six times more? There are two main reasons:

• Things got cheaper to make. Goods aren’t more expensive today because they got more expensive to make. In fact, technological advances, free trade, energy efficiency, and other factors have generally made things cheaper and less expensive to make. Sticker prices still increased because the U.S. dollar declined in value faster than things got cheaper.

• Inflation takes time to kick in. If the Federal Reserve effectively “printed” a trillion dollars today, that’s not going to immediately change the prices at your grocery store. It takes time—often several years—for newly created money to go into circulation and start impacting prices at the pump and checkout line. Money we print “today” means inflation “tomorrow.”

Want me to really blow your mind? Since we established the Federal Reserve in 1913, the value of the U.S. dollar has lost 97% of its purchasing power. In January 1959—when we began tracking the broad money supply—there were only 267 billion U.S. dollars in circulation. We’re now 84 times that figure and still printing.

Indignity by Fiat

What does any of this have to do with the dignity of work or earned success? If I pay you to do a job and you work hard to earn those wages and save your money, not only do your earnings actually depreciate in value every single year, but all the money you saved decreases in value, too. That grand you saved up in 1997 is worth only $500 today, or less, even though it’s still 1,000 greenbacks.

If dignity of work means making a living wage and we keep making it more expensive to live, there’s no permanence to the dignity of work. If you earn your way to success and I change the goalpost of what success looks like, then earned success is a fleeting illusion.

There is no dignity of work if the value of that work disappears after you’ve worked it.

There is no earned success if what you earn doesn’t hold its value.

This is only possible because the U.S. dollar, like virtually every other national currency on Earth, is a fiat currency. (Fiat means “by decree,” or “because I say so.”) It has value because:

• the U.S. government says it does;

• the U.S. government can tax its citizens and residents in U.S. dollars; and

• people believe the U.S. government will pay back its debt.

That’s it.

There is no commodity backing for the U.S. dollar, and therefore, no limit to how much we can make. But making more money doesn’t mean we can afford more things forever—it means that whoever gets the money that’s being created, first, can afford more for a little while before the resulting inflation catches up. It also means that any money that anyone owes in U.S. dollars is worth less, too. Combined, this is the core reason why wealth and income inequality get worse year over year, and it has a name: the Cantillon effect.

But it hasn’t always been this way, and it doesn’t have to stay this way.

Sound money is security for the dignity of work

What if the currency we use didn’t lose its value year after year as the supply of money increased, because there was only so much of it? That’s sound money in a nutshell. You may have never heard the term, but it’s what underwrote the vast majority of American and world history in monetary terms.

In a sound money system, if you saved $10,000 in 1997, it would be worth $10,000 in 2026. Actually, it would probably be worth more because you could buy more with it as technology, free trade, and energy efficiency made goods and services cheaper to produce. It’s the same principle of Moore’s law, but applied to a world with a fixed supply of money. Imagine that—a world in which you could save and actually get ahead.

More to the point that many liberals and progressives make—you wouldn’t have to renegotiate your yearly salary or hourly rate every five minutes with your employer to afford ramen at home, because there’s no more monetary inflation. Once you get to a living wage, reasonable benefits, time off, and work environment, it remains affordable. When things get cheaper, they tend to stay that way unless there’s an actual economic shock like a natural disaster, war, famine, or a pandemic—and those are temporary.

The Enlightenment era—in which the ideas of liberalism was born—was a sound money era. New inventions, cheaper energy, and freer trade made things cheaper even as people’s wages and savings held their value. Over time, people could afford to work less and pursue more of their hobbies and interests because they didn’t need to work as much to afford to live, and could spend the extra time pursuing art, music, literature, science, poetry, philosophy, reading, entrepreneurship, and education.

Now we might be on the same page, or at least the same chapter. Sound money is about people as much as it is about markets. It’s about the dignity of work. It’s about affordability. It enables “abundance.” It’s about earning success and achieving self-reliance.

It’s why sound money advocates say, “Fix the money, fix the world.” Fixing the money doesn’t fix the world by itself, but it’s next to impossible to fix the world without fixing the money.

How do we get sound money back?

Fixing the money isn’t like flipping a switch. We can’t just artificially peg the currency back to a scarce commodity, turn the U.S. dollar into a sound money, and make inflation go away. Even if we did, yesterday’s money-printing will still cause inflation tomorrow, for a time. Fixing the money means overhauling banking—where we create new money by lending—as well as addressing our existing debt.

It would mean a period of transition and seriously addressing the budget, forcing Congress to rein in spending, and for the first time in my lifetime, having a real debate about what we’re willing to fund as taxpayers and the tradeoffs of some spending over others. Without it, we have no democratic accountability or even real public visibility on the real cost—in taxes, interest on the federal debt, and inflation—for what policies we enact and what the government spends on our behalf.

To get sound money back, the public first needs to understand what it is, why we lost it, and what we can do about it, because the incentives and drive to keep spending more than we have and printing more money to paper over the problem are too great for most government officials to resolve on their own.

Deficit spending with a fiat currency is like a drug addiction. Printing more money to spend at a deficit will stimulate the economy for a short while, and things will seem great. The economy will experience a short boom. But eventually, inflation kicks in, prices catch up, and wealth concentrates in a few hands—especially as people sell what they own to survive the crash. The bubbles in markets will burst and things get dramatically worse. The economy will experience a bust.

To fix it, we take another hit of deficit spending and money-printing, relieving the withdrawal pains but deepening the addiction. Moreover, it doesn’t actually fix anything, structurally; it just makes everything a little more tolerable for a while longer as wealth continues to concentrate, debt continues to grow, and the dollar continues to lose value.

By the state of the American public, our sovereign debt, and the U.S. dollar today, we’re dangerously close to overdosing.

If we want to protect the dignity of work, earn success, and cure our sick economy, we need to detox from fiat deficit spending. To protect the value of our labor, our time, and our common wealth, we need sound money.

Related reading:

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Walking to one of D.C.’s many small parks, I came across a group of protestors—just three people—laid out in front of a nondescript office building inviting anyone and everyone that walked by to flip off the building because it was property of The Heritage Foundation. “Flip off a Nazi,” I was entreated.

I stopped, but did not—nor did I engage her premise.

Instead, I spoke with her—we’ll call her Anna. Our conversation was difficult, but civil. The gist of what I offered in return was, “I’m no fan of their work, but I am more concerned with building a better future—what comes next.”

Anna took the view, in all seriousness, that neither party nor any power or institution in the United States was any longer worth defending. Quite literally, she said, “Burn it all down.” Just days before the Fourth of July, no less.

I’m not unfamiliar with the fact that some people take this view. Coming face-to-face with it on a morning walk took me quite by surprise. I replied with something akin to, “When something you care about breaks, you fix it—you don’t throw it away.”

Then she challenged me: “What is there worth saving?”

I am displeased to say I was flummoxed to respond at first. I do not believe I have ever been asked that question so viscerally and challengingly, or to defend the value and virtue of the United States on such broad terms. I recall my thoughts flying in a million directions in an instant.

Some four more protesters arrived just then, and the conversation ended as the group coordinated to head to another event. I thanked them for taking the time to really speak, though we disagreed, shook her hand when she offered it, and continued on my walk.

I sat uneasy with that interaction for a good part of the day. Every fiber of my being rejected the idea that what we have built is broken to the point of loss, but I was myself lost for words.

On reflection, and in great irony, what caused me to struggle for words was that, to me, what was worth preserving felt self-evident.

How could I—need I?—explain to Anna that the fact she was there on a public street with a megaphone shouting at two men walking past in suits, inviting passersby to flip off the building, and able to freely assert that the American system of government should be thrown off and reconstituted somehow is itself evidence of what this country achieved that is worth defending, cherishing, saving, fixing?

The evidence of what the United States has built was everywhere, woven into the scene—both what was visible and what was not.

It was in the free commerce taking place at the café down the street. It was in Anna’s and her colleagues’ freedom of speech and assembly. It was in the police that I saw as I walked down the street—present but unobtrusive and observing her right to protest and speech. It was in the rule of law and right to trial by jury that undergirded every facet of life and interaction taking place.

We were standing in the capitol of the first country to declare that the right to Life, Liberty, and the Pursuit of Happiness were universal. Our observance of those civil rights and liberties has not always been perfect, and I would agree we have much to do to live up to that promise and declaration.

I wish I had found the words to say those things to Anna, then.

As an American, I have always carried with me from the time that I could understand its meaning, the notion that we are a country in perpetual motion towards a more perfect union. I have often criticized and been greatly critical of our state of affairs—and proud to do so. It is perhaps one of the most cherished of American ideals that by and for love of our country, we reserve the right to criticize it.

A country dedicated to an idea: “That all [people] are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

Today, on the 250th anniversary of that Declaration, I find that I have perhaps paid too little attention to America’s achievements and too much to her faults. I have certainly read The Declaration of Independence fewer times than I have celebrated its signing.

I did so this morning.

It is truly remarkable that those first words are so widely known. Lesser known, just a few lines below, are the words: “That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”

Anna’s desire to “burn it all down” is ironically perhaps no better captured than in the foundation of the very thing she believes, or at least says, she wishes to burn down.

To me, that is the very reason it is worth preserving, repairing, and renewing.

On my walk home from the park, I was stopped by another woman—we’ll call her Caroline. She stopped me to ask for help activating the electric scooter she was trying to operate. “Do you know how to work these?” “I think so,” I offered.

I learned that Caroline and her family were visiting D.C. to celebrate July 4th from Missouri. She beamed when she spoke of her children and her pride in their family’s service in the military. She excitedly noted that there was a special July 4th sale offering extra minutes for that scooter’s rental service.

I told her I couldn’t afford it—I’ve been unemployed and looking for work for many months. She expressed her sympathies—having “been there before”—and told me she and her family likely won’t use all the minutes, and she would be more than happy to send them to me if I could use them. I thanked her, but declined—I ride my bicycle if I have to get somewhere without using the metro, anyway.

After a few moments tinkering with her phone, I was able to help her figure out how to enable a ‘group ride’ for her and her family using her account, helped teach her how to ride one when she asked, and gave her some pointers on how to ride safely in D.C. She thanked me, we wished each other a happy Fourth of July, and parted ways.

Today I’m reflecting on that encounter, too.

We are both Americans. Jefferson City, Missouri is roughly 414 miles (666 km) away from Cincinnati, Ohio—where I’m from—as the crow flies. She had come roughly 815 miles (1,312 km) to D.C. to celebrate our common independence and the birth of our country. That’s roughly the distance between Paris, France, and Warsaw, Poland.

The strength of the American idea set forth 250 years ago—and right to criticize its implementation—made that interaction possible and brought us both together as fellow citizens. Two people, three places, hundreds of miles apart, all one country bound in unity by one idea.

It takes a moment to stop and reflect on the span of human existence, the sheer distance between those places, and the power of that idea to unite. Caroline, Anna and I are all Americans. We may honor different faiths, come from different places, hold different opinions, want for different things, lead different lifestyles—we could even speak different languages.

But commitment to that idea is what makes us all American.

Reading this, today, dear reader, you may have some notion, some imagination of the politics that Caroline and Anna likely hold. It is in part a product of the struggle we all face today to pursue our own happiness, secure our liberties, and preserve life. It is also a product of our hyperawareness of our own differences in pursuit of a future that fulfills those promises. We are divided in many ways—and as I reflect, we are a country that has always held a good measure of political division.

What is remarkable, and what I am celebrating today, is that our divisions are about how to keep the American promise we made 250 years ago—how to keep and honor the Truths we observed to be self-evident. It is about how we reconstitute ourselves, govern ourselves, and how we preserve and protect the right to Life, Liberty, and the Pursuit of Happiness.

We do not question those rights or the right to self-government. We argue how to keep them. We criticize how and when we have failed to do so. We debate what we must do to form a more perfect union.

And we are free to do so. That is worth being proud of and celebrating today.

Happy Fourth of July.

I take the view that none of that is going to happen—at least not on that timeframe—and that AI development will grind to a very slow-moving snail’s pace within about a year, during which time the economy will very likely experience great strain. My basis? The entire thing is a massive bubble overlapping with another massive bubble and, more recently, a massive global supply shock.

So I’ve taken this small hiatus from writing deeper structural reform think pieces because this is happening fast and in real time. At the risk of sounding like a badly prompted, X-posting AI bot: not enough people are paying attention to this.

There is a massive bubble forming in the AI industry fueled by circular investment and the promise of a future economic miracle that may never come. If it hits capacity — and it may have already — it will merge with an over-leveraged private credit market and collide with supply and demand shocks from the Iran war, wiping out millions of jobs globally. At worst, it breaks the back of sovereign debt burdens already straining under their own weight. At best, it's a hard crash in the only industry that propped up U.S. economic growth in 2025.

Things are evolving rapidly, and already some of this article written last week needed updating, so let’s dive into it.

AI Spending Doesn’t Compute

There’s an enormous, overriding, and dangerous assumption to every “AI will revolutionize the world” hot take: that the companies advancing the AI revolution will continue to grow. To do that, they need to be profitable, and the math behind that isn’t mathing.

Here’s a splash of cold water: total AI industry net profit from AI is $0. Zero. None. In fact, most of them are deeply under that cold water.

Let me pick on one company as an example: OpenAI. Just from publicly reported figures, OpenAI has between $127.6 billion and $167.6 billion in direct funding investment. That’s money investors expect they will ultimately recover with additional returns.

OpenAI has committed around $600 billion in major commercial and cloud purchase commitments across Oracle, Microsoft Azure, and Amazon AWS and an additional $500 billion for the Stargate project. That’s money OpenAI has promised to spend on Oracle, Microsoft, and Amazon products, and spending it has committed to the Stargate project. In return, those companies are expected to pay OpenAI for their models.

OpenAI expects to spend about $600 billion through 2030 in computing costs.

Total revenues from 2023-2025? Taking the most generous publicly reported valuations I could find for 2023, 2024, and 2025, somewhere around $21 billion. You might think this is promising, until you consider that OpenAI's 2025 expenses were reportedly $8 billion.

Summing this up—imperfectly, since we don’t exactly have every company’s accounting sheets in front of us—investors are expecting at least an additional $100 billion in direct investment returns to break even. OpenAI expects to spend somewhere on the order of $600 billion in compute, $600 billion in commercial and cloud purchases, and $500 billion for the Stargate project.

These figures overlap, and aren’t all legally equivalent obligations, but taken together they illustrate the scale of the gap between what the industry has committed to spend and what it has earned. If the math is even close to right, OpenAI needs to raise somewhere north of $1 trillion dollars; is presently losing money on expenditures; and their largest immediate prospective source of revenue are the companies they expect to buy from. That sounds like circular investment to me.

And it’s not limited to OpenAI. No AI company has publicly reported AI venture profitability yet. Anthropic, xAI, Google’s DeepMind, Amazon’s Nova, Meta’s Llama—none have yet reported net profitability. X, Google, Amazon, and Meta are themselves profitable, of course, but their public earnings reporting does not break out AI venture profitability nor have they announced a growth in earnings due to their AI products.

Hypothetically, these AI ventures could all be profitable and not reporting it, but when do you not report breakout into net profitability on emerging technology to drive more investment and purchases?

To be clear and fair here, neither promised spending nor capital investment are strictly debts that the companies owe in the red on their balance sheets—yet. Depending on the source, the direct costs from running the models appear to show that AI companies such as OpenAI are at least breaking even and are likely profitable. R&D to develop the next, better model—the “AI race”—are what is sucking in so much additional capital in investment.

However, the companies’ future investment in each new model, their stock valuations (for those that are publicly traded), and their present and future clientele, are inherently tied to the notion that AI creates significant value and that their models—both the AI and their business models—will scale. Key to many companies’ claims is that they are at breakaway capacity to develop Artificial General Intelligence (AGI).

The real question, therefore, is the rate of return on AI investment—whether through buying stocks, direct investment, or user investment in time spent learning to use and incorporate AI models into their workflows. It’s not about the profitability of OpenAI for itself, but whether AI is profitable to investors—whether the rate of return is high. Those numbers seem less convincing at present.

The entire premise behind the industry is reliant on the creation of thousands of new data centers to deliver somewhere on the order of a 1,000% increase in computing capacity, massive amounts of new energy production, and a huge volume of future revenue to justify its capital expenditures—none of which are certain and most of which are in serious jeopardy.

Selling Eggs Before They’re Laid

As my non-expert brain has come to understand it, the full stack of AI development can be thought of in layers. You first need the capacity, then the power, then the storage space to host data, then the data and models, then the customization, then the API layer, and then the actual interfaces in applications and agents. It looks something like this:

Chip production ➝ Hardware design ➝ Data centers ➝ Power supply ➝ Cloud and computing access ➝ Data acquisition and stacking ➝ AI model development ➝ Customization ➝ Serving and routing infrastructure ➝Applications and agents

It’s a layered structure with semiconductor chips serving as the foundation. This gets important really fast.

As of October 2025, NVIDIA announced it had already committed the sale of its entire 2026 supply for advanced semiconductor chips, some $500 billion in purchase orders or signed commitments. These are contracts to buy NVIDIA’s chips before they have been made, pricing in expected costs and anticipated production supply.

This isn’t just a problem for NVIDIA, but for the entire AI industry. It relies on growing revenue working rapidly towards profitability, sooner rather than later, to continue to finance infrastructure and model development. The entire industry’s development structure is dependent on chip production.

What wasn’t priced into those contracts was a decline in global supply of helium, oil, copper, aluminum, and silver—all necessary to produce chips—from a war in Iran kicking off in March 2026. That likely means that either the total number of chips produced will be much lower, the price tag will be much higher, or some combination of the two.

Shocking Supply

To put this in perspective—helium alone is a necessary, non-replaceable input for semiconductor chip production. Qatar alone provided one third of global supply prior to the Iran war. One industry estimate put helium price increases at 10-20 percent, and up to 25-50 percent if the Strait of Hormuz remains effectively closed for two months. While helium is only about 1% of total production costs for semiconductors, the spike in price could still create bottlenecks and send costs much higher. If there is a genuine shortage—which experts estimate could ensue if the Strait remains closed for three months or more—semiconductor production could begin to decline.

Copper production was reportedly short just to bring about further grid load, let alone the data center production before the global supply shock to copper. The demand for copper for everything from batteries to vehicles to wiring to windmills is high. Aluminum and industrial silver are likewise in high demand. The Iran war brought a halt to the export of much of the world’s sulfur—a key ingredient in sulfuric acid necessary to refine raw copper and aluminum.

Publicly available data on copper, industrial silver, and aluminum as a total cost of semiconductor production, as best I was able to find, are each around one percent of the total production costs for semiconductor production. The main raw material for semiconductor chip production is silicon—made into silicon wafers. The main supplier of silicon wafers, globally, is China, which produces around 80% of all silicon wafers. China is also the world’s largest importer of oil and gas, fueling its power grid and industrial production, and is now facing shortfalls and growing prices due to the lack of LNG and oil exports through the Strait of Hormuz.

Every additional input shortage or price hike to the semiconductor chip production industry, data center fabrication, or any other application along the supply chain to AI adds that much more price friction and risk of bottlenecking.

Spinning Up a Vicious Cycle of Borrowing

Worse, because the industry is funding itself through largely circular investment, it’s also financially dependent on chip production. No chips, no data centers, no cloud AI storage, no model development, no customization, no agents. The entire house of cards could collapse.

And that’s just the semiconductor chips. It also didn’t price in the supply shock in energy prices for data centers as LNG and gas supplies globally dry up and costs rise. It also didn’t price in a demand shock to their future customer base that now has their own increased costs in energy to bear.

And that’s where Sam Altman or someone else would be quick to remind me that businesses are already adopting AI and will save millions and millions of dollars using it. In my best defense of that argument as I understand it, businesses are still scaling AI and figuring out how to best use it. Once that path becomes clear, rapid AI adoption will yield massive profits.

So, the data should already be showing early signs of that. But it’s not. So, let’s talk about AI agents, zombies, and lies.

AI Agents, Zombies, and Lies

Another key, underlying assumption to the “AI miracle” narrative is that AI is actually driving massive gains in labor productivity. It sure would seem to be by all the industry hype and announcement after announcement that companies are replacing their employees using AI. But is that really happening?

The data mostly says no.

The National Bureau of Economic Research (NBER) published a study in February 2026 (updated in March) titled “Firm Data on AI.” This passage is worth quoting in full:

“[M]ost executives report small effects thus far on own-firm employment and productivity. More than 90% report no impact of AI on own-firm employment over the past three years, and 89% report no impact on labor productivity (sales per employee). A small percentage of executives report positive productivity effects to date.”

That’s economic speak for, “AI isn’t cutting costs.”

Even the more optimistic forecasts and analysis gathered and conducted by the U.K.-based Center for Economic Policy Research (CEPR) found that across the United States and Europe, total labor productivity gains from AI were 4% and were not a major factor in job losses. A few excerpts from CEPR’s paper abstracts:

“Using matched EIBIS-ORBIS data on more than 12,000 non-financial firms […] Our results show that AI adoption increases the level of labor productivity by 4%. Productivity gains are due to capital deepening, as we find no adverse effects on firm-level employment.”1

“In labor markets, we find little evidence of near-term aggregate employment declines due to AI, though larger companies anticipate AI-driven workforce reductions, while smaller firms expect modest gains.”2

That’s economic speak for, “AI isn’t cutting existing jobs.”

So, AI doesn’t seem to be wiping out existing jobs and it’s not driving huge productivity increases. So, is it saving on new jobs? That data seems even more problematic. The International Center for Law & Economics published a February 2026 paper in which the authors found AI did contribute to reduce task completion times and increase quality, mostly in more basic tasks. Here’s an excerpt from their executive summary:

“Across writing, customer support, software development, accounting, law, and translation, studies report 15% to more than 50% reductions in task-completion time, meaningful quality gains, and disproportionately large benefits for less-experienced workers, producing “skill compression” within occupations.

At the same time, aggregate labor-market indicators through 2024–2025 show limited disruption, despite rapid adoption. Most datasets find little evidence of economywide job loss or wage decline. Where effects appear, they are concentrated in entry-level segments of highly exposed occupations, while senior employment remains largely stable. Adjustment to date has occurred through task reallocation and within-firm productivity gains, rather than mass displacement.”

That’s economic speak for, “AI isn’t driving job cuts, but may be reducing new entry-level jobs.”

And more recent news reporting appears to bear that out. This is, according to multiple sources, the worst job market for entry-level jobs, and the entry-level job market itself is in rapid decline. But here’s the thing: It’s been on decline for years. Since well before AI presumably took over the entry-level jobs and internships.

Are companies replacing their paid and unpaid internships with AI? Probably, some. Here’s a Forbes opinion article on why “that’s a stupid move.” Short version: If you don’t hire people for entry-level jobs today, there will be a shortage of highly-skilled employees tomorrow. And that may already be happening.

So, the AI miracle, if it’s coming, doesn’t seem to be here yet. What does appear to be happening is “AI-washing.”

A Bloomberg article from mid-March 2026 highlighted that many companies are reframing their job losses as job cuts due to AI usage. Why? Because the narrative that AI adoption is helping them cut costs is much more attractive than forced layoffs due to shrinking revenue or rising operating costs. This is what’s known as “AI-washing.”

It’s not just Bloomberg. The Guardian broke a similar story in February. Forbes wrote about the risks of “AI-washing” to businesses, noting it’s “tantamount to making false claims about your company’s capabilities.”

That’s corporate speak for, “Selling layoffs as AI adoption is lying.”

Jack Dorsey, founder of Block and co-founder of Twitter (now X), made waves in February when he publicly announced on X that Block would be laying off 4,000 employees to replace them with AI. The announcement sparked article after article and post after post about the AI economic revolution replacing white collar workers. Other analysts pointed to the fact that his firm faced a weakening crypto market, overstaffing, and a declining stock price. Block is now re-hiring a select few of that staff.

Many similar stories have been published. In reality, I suspect a large amount of those cuts are zombie companies AI-washing layoffs. A zombie company is a company that makes just enough to service its current debt, but lacks capital for growth and tends to be close to insolvency.

These companies tend to keep on their staff through periods of economic growth when credit is cheap and business is good, and subsequently lay off large swathes of employees whose work contributes little to company revenue when the economy shrinks, credit tightens, or their business model runs dry. (More often than not as a result of over-hiring and capital misallocation rather than a lack of potential labor productivity of those workers.)

Is Block such a company? I don’t know. I doubt it. But it does seem more plausible that Block over-hired and then laid off their excess manpower after a market correction and a stock price fall than that Block found a way to use AI to replace 4,000 productive workers’ jobs in one go.

This is financial speak for, “Companies are rebranding layoffs as an AI miracle.”

So, the data, the reporting, and the companies’ own admissions seem to suggest that AI isn’t actually revolutionizing the economy, yet, nor driving large economic gains in productivity.

And it’s at this point that the pivot is usually made: it’s not one AI that will solve the challenges, it’s multiple AI agents cooperating to perform a task correctly that will create an “AI ecosystem” that will drive productivity. The data behind that story is also messy. A recent preprint research paper suggests that multiple AI agents frequently can’t agree on how to perform a task collaboratively—sometimes simply stopping after reaching an impasse.

At this point, my friend would no doubt recall that any new venture firm takes time to develop and reap returns, and that AI is no different. He would also remind me that AGI development is on its way, and point me to AI models’ reasoning tests and skills—about which I still remain highly skeptical.

But that isn’t the question that needs answering. That’s the narrative argument supplanting the real question: what happens if AI is successful, and what happens if it fails?

Narrative Warfare and Market Confidence

Even if AI modelers fix AI’s many technical flaws, overcome the problem of technical debt (including from “vibe-coding”) and agreement between AI agents, and eventually create some version of AGI, there remain scaling financial, material, and data challenges to its widespread adoption and usage. These scaling challenges—circular investment, bubble investment, infrastructure development—are fundamentally constrained by money and financing.

And this is where we get to the ongoing debates around AI and the economy. You may be aware of the (in)famous Citrini article that rocked the debate around AI and the economy in late February. For the lost—the article was a widely-read thought experiment framed as a fictional macro memo from June 2028, describing a scenario in which AI’s success becomes the engine of economic collapse. Mass displacement of white-collar workers causes productivity and profits to temporarily surge, but collapses demand, mortgage markets, and tax revenues. Unemployment spikes, the S&P crashes, and traditional monetary policy tools are largely ineffective to react to it.

The economy collapses because of AI’s success, rather than its failure.

What was remarkable to me about the thought experiment wasn’t the argument itself, nor the reaction from the general public, but the reaction it provoked because of the widespread narrative that it diffused among the public. Citadel Securities—one of the largest market making firm—replied point by point refuting the basis of the thought experiment. Why would a financial firm feel compelled to do such a thing?

Because if the narrative of AI success causing market collapse won out, the cycle of private credit investing would collapse—wiping out AI investments. Citadel Securities’ rebuttal seems to have had a measurable impact in calming investors in AI development.

What does this mean for AI and the economy itself? Investors and markets are concerned not just that AI may not deliver its revenue, but that it could overdeliver quickly. Citadel Securities had to respond because the narrative that AI success could collapse the economy within two years caused a panic among investors across the board.

Alex Thorn put it well on good ole financial Twitter a month ago:

This is the argument in a nutshell. If AI fails to deliver sufficient gains to investor spending along a reliable enough timeframe, it may present a significant liquidity squeeze on those expecting returns. If investors lose confidence in AI development’s ability to field returns, it can cause investor flight from AI development and cause markets to collapse under the strain, stifling further AI investment and development in a downward spiral. The market crashes AI development.

If AI is too successful and replaces too many jobs in too short a timeframe, it could cause demand destruction. Fewer employed people leads to lower spending across the economy, lower business revenues and taxes, and slowing economic growth right when AI needs the demand to deliver returns to investors on its adoption. Moreover, even a modest job shortage could result in a consumer credit crisis, stress government receipts, toppling the debt-fueled model that governments operate on to fund their spending. The result could be multiple full-blown sovereign debt crises. AI crashes the market.

The problem is real. The markets sustaining AI development and investment to achieve the growth are themselves dependent on demand and economic growth. The question for investors isn’t whether AI-driven job displacement will displace white-collar work, but how much it will displace and how fast.

Luke Gromen also summed this up well:

The problem is the assumption that demand and credit will always be there. Consumer spending and taxes must ultimately fuel employment, business revenues, and government financing that in turn enable those individuals, businesses, and governments to purchase or license AI models. If AI adoption cuts its own funding streams, its own development could cause its collapse. It could cannibalize itself.

And no matter how good AI gets, it cannot replace markets. Industry leaders know this.

This is one reason why there’s so much narrative propagation and narrative warfare about the promise of AI development. Why corporate leaders from companies invested in developing AI infrastructure, models, and software applications continually urge the public to adopt and learn to use AI, yet paradoxically note that it will replace the need for so many of their jobs. Why market makers are so sensitive to narratives around collapse. Why, despite widespread public rejection of AI overuse, companies advertise its use in nearly every application.

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Reality Check

Even if, as many brilliant scholars suggest, AI adoption is simply following a J-curve in productivity growth and employment, the question is timing and system stability.

Article after article promises that AI will replace all manner of jobs in six months. Twelve months. Eighteen months. Anthropic’s CEO Dario Amodei remarked two weeks ago on 60 Minutes that AI will wipe out half of entry-level white collar jobs in law, consulting, and finance over the next 1-5 years. More fighting over the narrative.

But let’s just assume that happens, gradually, over five years. We just introduced a sizable demand shock within a timeframe in which most of those professionals don’t contribute to further economic growth through anticipated consumption—demand. Let’s even presuppose ideal conditions—no private credit bubble, no AI investment collapse, no supply and demand shock from the Iran war.

What happens in the next 1-5 years when mid-career professionals advance? Who replaces them? We just eliminated the pipeline of early-career professionals gaining the experience needed to advance into the rest of the industry. Is AI supposed to take over their jobs, as well? All of them? What about the jobs that require a human decision-maker with legal, financial, or personal accountability for their actions and decisions? That’s a labor shock in the other direction waiting to happen.

Now let’s return to the present for a moment. Can the economy and AI industry sustain simultaneous demand destruction and speculatory development and investment financing in the interim?

Under a sound money system, potentially. Capital investment would likely follow productive returns and pursue less speculatory investment practices as credit-driven financing would take less primacy and require more fixed collateral. AI development would likely be and have been slower, but more sustainable.

Demand would theoretically align with a more globalized J-shaped growth pattern. Short-term decline, long-term growth. Households affected would be able to rely on long-term savings unaffected by currency debasement. Industries could take greater hits to their balance sheet without collapse.

Under a fiat currency system with a highly financialized global economy? Unlikely. Collapse in one sector creates contagions that can ripple across across the financial rails of the economy, resulting in sequential collapse. Businesses, individuals, and governments depend on credit and debt financing to operate. Governments in particular depend on deficit spending and bond markets to meet their spending commitments and provide public services.

Private credit markets—which are heavily intertwined with the AI industry through investment and development—are teetering on the brink of collapse as private credit market makers and companies face record redemption requests, cap withdrawals, and face liquidity squeezes. Credit ratings agencies—facing potential SEC investigation—suddenly downgraded major private credit ratings to “junk” status.

The chance that the AI industry generates returns to justify the massive amount of investment in AI and LLM development along the timeframe the industry promised is remote. Even more remote if private credit markets collapse, and all but impossible with the simultaneous supply and demand shock from the Iran war.

Only one of those three needs to create heavy economic impact and send them all careening to collapse, and we’ve already cut the oil supply. It’s a perfect storm forcing markets to price reality back in, and it will be an ugly correction. It would be like the 2001 Dot-com bubble bursting, the 2008 financial crisis, and the 2020 COVID supply shock all happening at once, each possibly bigger than before.

So, will AI take your job? Maybe. Probably not directly, and not soon. Could the AI bubble bursting, private credit market collapse, and supply shock and demand destruction from the Iran war take your job down with them? Very much yes.

The most damning thing about this entire story to me isn’t the job losses, the risky decision-making and overleverage in private credit markets, the speculatory and circular investment in the AI industry, or even the apparent lack of planning behind the Iran war and its massive economic impacts. It’s that none of this had to happen.

This is, almost all of it, predictable behavior driven by structural incentives native to fiat currency systems—and largely absent under sound money systems. In other words, we knew this or something like it would happen. We all of us let it happen anyway. (And even that isn’t entirely unpredictable given our electoral incentives.)

We need structural reform to overcome it. The good news is that we can fix it, and we must share responsibility for doing so. But there’s no sugarcoating how bad it can and will get before that.

A few days ago on X, Mark Cuban observed that at the start of the PC revolution of the 1980s, it cost a white collar worker a hefty $4,995 investment to buy a computer, which he notes would be an inflation-adjusted cost of about $16k today—a hefty sum. You had to learn how to use it from the paper manual.

He then compared that stark cost to today’s remarkable opportunity in AI. Anyone can open a browser, pull up their LLM of choice, and start learning how to use it for free. An argument for adoption of this new, and yes, remarkable tech.

Mark is right about the opportunity to learn to use AI. He’s wrong that it’s free. AI is not free. Most of us just don’t realize we’re paying for it, and we haven’t fully realized the cost yet.

Part of the Renewing the American Republic Series

A healthy republic rests on three foundations: institutions worthy of trust, money that preserves economic integrity, and a civic culture of shared responsibility. This article is part of a series examining how each has weakened in modern America—and how each can be renewed.

Key Points:

• America’s economic and political crises are intimately connected. America’s affordability crisis is not separate from its debt crisis, inequality crisis, industrial decline, or political dysfunction. They are all connected by the way money works.

• These crises can be traced back to the shift from sound money to fiat currency. The shift from sound money to fiat currency removed a key restraint on political and financial behavior, making it easier to spend without reckoning, promise without paying, and govern without visible trade-offs.

• Fiat currency distorts political and economic behavior by hiding costs. In practice, fiat currency makes it easier for democratic politics to drift away from reality. Costs are delayed, voters cannot clearly trace consequences, and politicians are rewarded for short-term relief over long-term stewardship.

• This system exacerbates wealth inequality. Inflation does not just raise prices. It steadily erodes wages, savings, and retirement funds while making it easier for holders of assets to preserve and grow wealth, widening inequality over time.

• Rising federal debt is not just a future threat. Interest payments are already crowding out the actual work of government and weakening America’s capacity to govern effectively.

• Dollar dominance comes with trade-offs. Global reserve currency status has made foreign goods cheaper and deficits easier, but at the cost of hollowing out domestic industry and making the U.S. economy more financialized, fragile, and dependent on crisis management.

• This is a story of design failure, not villains. This system does not need villains to do damage. It is a design failure that rewards short-term gain, defers long-term cost, and increasingly governs through bailout, inflation, and drift.

• Returning to sound money is necessary. Sound money isn’t a panacea, but it is a necessary step to restore honesty in politics, enable the middle class and the economy to grow sustainably, and restore restrained state capacity to government.

A Dream Adrift

America is built on the promise of opportunity and independence through hard work and good judgment. It is the idea that, protected by democratic institutions, the American people can earn enough not just to survive, but to thrive.

That promise is broken. Americans and the U.S. economy are consistently struggling. For many, it feels as though no matter how hard they work, prices always climb higher and make it that much harder to save or get ahead. People take multiple jobs and work longer hours just to keep up with their standard of living—and even that doesn’t always guarantee stability.

It doesn’t just feel that way—the numbers bear this out. The middle class continues to shrink year over year. Inflation is outpacing wage growth for most Americans. As of January 2025, some 42% of Americans can’t even save enough for an emergency fund. A February 2026 poll found that more than half of Americans can’t afford health care, taking a weeklong vacation, or buying a new car.

It’s not just private citizens. Government debt accrual hits all-time highs every fiscal year even as interest on federally-held debt climbs higher. In 2025, U.S. federal debt topped $38 trillion U.S. dollars. In early February 2026, The Congressional Budget Office (CBO) predicted the U.S. debt would climb to $64 trillion by 2036, over which time the United States will spend $16 trillion in interest on that debt.

That was before CBO assessed the rising cost of the war in Iran and calculated that the U.S. borrowed an average of $50 billion every week for the past five months. (While writing this article, the national debt hit $39 trillion—if you don’t count the roughly $51 trillion in additional implicit obligations.)

The share of small and medium-sized businesses versus large businesses in the economy is in decline, even as bailouts for banks, airlines, and big businesses that are “too big to fail” continue. The economy recovers from the shocks, but wealth inequality continues to grow worse and American families continue to struggle with rising prices against relatively stagnant wages. The latest American political catchphrase says it all—”affordability.”

These are not isolated failures. What Americans experience as separate crises of affordability, debt, inequality, and decay are often downstream effects of a deeper institutional problem with what money is and how it works. America’s shift from sound money to fiat currency changed the incentive structure behind politics, finance, and the economy in crucial ways that are systemically corrupting—whether anybody wants them to or not.

Our economic system evolved to rely on good ideas that do not work well when they meet the reality of decision-making in a democracy. As a result, it corrupts honesty in politics, erodes the middle class, weakens state capacity, hollows out the American economy, and turns governing into the semi-permanent job of crisis management.

The way our money works is turning the American Dream into a nightmare. And yet, nobody alive today meant for this to happen this way, it doesn’t have to be like this, and we can fix it.

Dreaming Up a Nightmare

Let’s talk about how we got here. Here’s the short version. (For the long version, check out this article (coming soon).)

The value of the U.S. dollar used to remain relatively fixed over time as it was tied to the value of gold. This was called the Gold Standard. Credit and debts existed, but on the basis of final settlement in gold. This meant the amount of U.S. dollars was fixed and tied to the amount of gold that backed them.

This meant the U.S. dollar existed as a sound money: a currency tied to a scarce asset and therefore constrained from being created in unlimited quantities at political convenience.

In 1933 and 1934, the government outlawed private ownership of monetary gold, then devalued the dollar relative to gold. In 1944, the Bretton Woods system was established, pegging most major foreign currencies to the value of the U.S. dollar, which was pegged to gold. In 1971, the United States canceled conversion of U.S. dollars to gold by breaking the peg and refusing to exchange U.S. dollars for gold at the exchange rate.

This move turned the U.S. dollar, and all the currencies pegged to it, into fiat currencies. A fiat currency is one backed not by a fixed redeemable asset, but by state authority and public confidence, and can therefore be expanded far more freely.

America’s shift from sound money to fiat currency did more than change what backed the dollar. It loosened the institutional restraints that once bound money to discipline, making it easier to obscure trade-offs, defer consequences, and steadily separate political choice from economic reality.

That fundamental shift redesigned the moral architecture of public decision-making. When money was no longer tightly constrained, it became easier to promise without paying, spend without reckoning, and govern without stewardship.

What followed was not merely inflation or debt, but a deeper corruption of incentives. We created a system that makes it easier to avoid trade-offs, harder to read consequences, and more tempting to consume institutional trust faster than it can be rebuilt.

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America Gone Astray

The U.S. dollar, as a fiat currency, enables the U.S. Federal Reserve and U.S. Treasury to freely issue more U.S. dollars—what economists refer to as monetary expansion. Because the government can effectively ‘print’ more money, the Congress can approve budgets that operate at a deficit—to spend more than the government takes in in taxes and other revenues.

Under normal conditions, in a fiat currency system, the government can spend more and cut taxes during a recession to jump-start the economy, and cut spending and raise taxes when the economy is performing well to offset the debt it accrued.

The problem is that this idea fundamentally ignores the political realities of governance, particularly in a democracy, and it’s wrecking the American Dream.

Fiat Currency in a Democracy

If a candidate is running a tight race, they’re incentivized to advocate raising benefits (spending), cutting taxes, or both. This tends to be popular, and it shouldn’t be surprising. There is nothing inherently wrong with Americans wanting more benefits at less cost. Their opponent will be hard-pressed not to match that offer to keep politically competitive in the race.

Over time, politicians collectively start advocating for budgets that continually raise the deficit, or simply stop pricing their policies altogether. This is as true for the Office of the President as it is for the U.S. Congress. As a result, the U.S. continually accrues more federal debt and issues more currency to pay for it.

Moreover, federal government bloat and unnecessary or redundant expenditures are less politically costly because they are not immediately felt by the American taxpayer at tax time—which dramatically lessens the incentive to correct them. Costs are a source of information as much as to voters and politicians as to consumers. When something costs more, it forces voters, politicians, and policymakers to make a choice about trade-offs. Is this worth it?

American democracy only works when voters, their representatives, and their public servants can make informed decisions. When those costs are delayed, deferred, and obscured, neither the American public, politicians, nor policymakers have all the information to make an informed decision. Worse, with just the information that isn’t delayed, deferred, or obscured, it seems reasonable to argue that we can simply spend more to solve our problems—even if that makes underlying problems worse.

So we do.

Inflation, Inequality, and Interest

Most Americans don’t realize that they are still paying extra when the federal budget is in deficit—not just in some future, but today. The more U.S. dollars that are issued, the more the money supply increases, and the less each dollar buys. Issuing more fiat currency contributes heavily to inflation over time. In fact, the U.S. Federal Reserve (the U.S. central bank) explicitly aims to create inflation—though in a controlled, moderate fashion, somewhere around 2%.

With higher inflation, the cost of everything to the average consumer rises in U.S. dollar terms. The more inflation rises, the less affordable everything is, and the more money Americans have to make to continue to pay for everything—the purchasing power of the U.S. dollar falls. For most Americans in the middle class and below, that repeatedly hits pocket books by devaluing savings, retirement funds, and wages.

This is where fiat currency becomes a structural amplifier to wealth inequality. If you know that inflation is going to reduce the purchasing power of the U.S. dollar, and you have a lot of money in savings, you’ll seek to prevent that money from losing value. This is why the wealthiest Americans don’t actually have billions of U.S. dollars—they hold hard assets worth billions of dollars.

Many of those assets don’t lose their purchasing power—and in some cases, the value of those assets increases over time. As the value of the U.S. dollar falls, most everyday American wage-earners and savers lose value while those holding assets—including and especially the very wealthy—retain their value or gain more value.

This makes inflation a structural amplifier of wealth inequality—whether billionaires and corporations engage in greedy behavior or not. Simply protecting the wealth you have in assets makes it impossible not to become wealthier than everyone who can’t protect their wealth.

Americans are also paying for high levels of debt in today’s taxes as interest on growing national debt. Interest payments on federal debt represented 13% of total federal spending in 2023. For every one dollar collected in taxes, at least 13 cents went to paying interest on debt. And that figure is only rising.

Weakening American Governance and Industry

Rising interest payments on federal debt isn’t just a tax burden—it eats into state capacity to address real problems of governance. Interest on the debt has grown to be the third-largest spending category for the U.S. budget—more than the U.S. defense budget, and only overtaken by Medicare and Social Security. That reduces the U.S. government’s capacity to invest in education, research, national security, and other public services.

It’s not only state capacity that suffers. Because the world relies on the U.S. dollar for trade in oil and as the global reserve currency, the dollar is made artificially strong by high demand. As a result, foreign goods and services remain more affordable for everyday Americans, but American goods are made more expensive abroad. Over time, this has slowly hollowed out American industry and manufacturing, making the U.S. economy slowly weaker over time—and less competitive with rival economies.

Rather than a casualty of free trade or unfair trade relationships with foreign countries, American industry is driven out by the United States’ own currency dominance, making foreign goods cheaper to buy. At the same time, the U.S. government could, for a long time, afford to run massive deficits and rack up its debt without immediate consequence. Both are double-edged swords, but after years of cutting both ways, America’s balance sheet and industry are now bleeding in the red.

Bandages and Bailouts

These effects, combined with fractional reserve banking, have led to the financialization of the American economy. Finance, debt, and asset markets take on an increasingly larger role in the economy than the production of goods and services. Fractional reserve banking allows banks to keep only a fraction of deposits in reserve and lend out the rest, allowing more claims on money to exist than cash immediately available for withdrawal. These processes shift growth and profit toward leverage, speculation, and asset values, and away from productive industry and wage growth.

In this system, banks do not keep all deposited money on hand and are incentivized to extend credit in ways that can increase systemic risk. This system enabled, but did not directly cause the Dot-Com crisis in 2001, the 2007-2008 Global Financial Crisis, the 2019-2020 repo market and COVID economic crises, and the 2023 banking crisis. It did so by enabling credit expansion and systemic leverage through fractional reserve banking and by introducing moral hazard through the availability of a bailout through monetary expansion.

Without fractional reserve banking, financial institutions would be less able to over-lever themselves with debt obligations and risky or speculative loans, which, in turn, would dramatically reduce the risk of systemic collapse by contagion. Without fiat currency, there would be no way to backstop systemically important financial institutions—the “too big to fail” banks, private credit issuers, businesses, and other institutions—by expanding the money supply when they collapse.

Even if they aren’t lost, the government’s bail-outs fundamentally involve expanding the money supply, often creating massive inflation in the process. As a result, even if the system doesn’t partially collapse, the bailouts still eat into the average American’s wages, savings, retirement funds, pensions, mortgages, loans, and wages. A better solution would be to avoid the potential need for bailouts altogether.

The Price of Fiat Money

Taken together, this is a system that rewards short-term politics, burdens the public with rising debt, erodes middle-class wealth from wages and savings, weakens state capacity, hollows out industry, and traps the economy in a cycle of speculation and bailout. It is defended as a tool of stabilization, yet it repeatedly fails to prevent the shocks it was meant to manage.

That is not good governance. We have created a system that preserves itself by steadily consuming the institutional trust and credibility on which it was built. That is institutional, economic, and societal erosion by design.

The most damning thing of all is that none of it needed a cartoon villain plot.

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Designing Our Own Decline

This decay and decline naturally invites anger and vitriol. This affects real people’s lives. Yet, none of it was irrational. Each step was taken to solve a real crisis, but over time crisis management stopped being an exception and became the system itself.

Simply put, we designed a system that incentivized us to make all the wrong choices, rationally.

When consequences can be delayed without immediate cost for immediate gain, they will be. When costs are invisible, they don’t get priced in to decision-making today. When few people have awareness of the problem and nobody individually has the authority to reverse course, the train never stops.

That doesn’t mean there aren’t malicious actors or negligent decisions being made. It means that even if there weren’t, we would still have the same problems. When your problem needs no villains, it’s not about good guys and bad guys. It’s a design failure, not an attack.

That also means that defeating ‘bad guys’ doesn’t solve the core problem.

This point is worth emphasizing. No single decision created this outcome. No single administration engineered it. No single party benefits uniquely from it. It is not a moral failure for elected officials to respond to political incentives, for voters to prefer lower taxes and higher benefits, for central bankers to prioritize preventing collapse, or for private industry to seek profit. Even if you replaced every voter, every politician, every banker, every billionaire and hedge fund manager, you would get the same results.

America could tax the billionaires to the poor house and still not be able to afford its budget and social services. America could remove every immigrant and still face industrial job decline. America could nationalize everything and still have less capacity to govern. America could privatize everything and still not build the middle class back. That means that solving America’s problems requires real institutional and structural reform, not a policy shift or a crusade.

The system produces these results because the incentives embedded within it reward short-term growth and stabilization, visible relief, and political survival while quietly deferring the costs of those choices into the future. In one sense, this is the system working exactly as intended by preventing immediate collapse. What it fails to do is prevent erosion or failure in the future.

That future is here. The risk of a crisis from which we may not be able to recover is real.

That is too high a price to pay.

Charting a Better Future

Democracy depends on citizens being reasonably well-educated, but also on being able to read the consequences of policy. Durable institutions align incentives so that ordinary political behavior produces sustainable results. A republic does not fail because its citizens act in their own self-interest. It fails when its institutional design makes long-term stewardship politically irrational.

Good governance does not rely on constant moral heroism from saints to operate as intended or for baseline conditions. It aligns incentives so that ordinary behavior from ordinary people enables them to govern themselves well. A republic that functions only if its leaders consistently choose what is politically painful over what is politically rewarding is not well-designed. It is a system governed by hope.

When incentives are misaligned, even good people will reliably produce bad outcomes. We cannot demand virtue where incentives reward vice. Hope is not a strategy.

The question is how to design our institutions to produce good outcomes without requiring extraordinary virtue. The American founders understood this, implicitly, designing checks and balances, separating powers, and encouraging pluralism bound together with universal values. Reforming our economy is not abandoning that system or those values, but repairing and renewing them.

To design a better future for ourselves, we must engineer an institutional return to sound money. Under a sound money architecture, costs become visible constraints again. Policymaking and politics must address real trade-offs with voters. Growth becomes sustainable again. Industry can become competitive again. Stewardship becomes more rewarding than capture and speculation. State capacity is bounded by economic reality.

It is the foundation of a future in which families can build, businesses can compete, government can govern responsibly, and prosperity can last. It is a collective victory Americans can achieve, together, that requires no one to be defeated.

Alexis de Tocqueville once said of America’s democracy:

“The greatness of America lies not in her being more enlightened than any other nation, but in her ability to repair her faults.”

The United States is made great not by perfection, but by correction. Our greatest strength is and has always been our ability to repair what we have broken. Our ability to correct ourselves.

The good news is that we have yet time to do so.

Up next in this series: Sound Money (Part 2): Correcting America’s Economic Course (coming soon)

(Like what you read? Help me fund the coffee that goes into these articles by pledging to my publication.)

Image created and generated by Cameron Vaské with Grok, inspired by a previous image used for this article:

Photos used & edited under Standard License (Adobe Stock):

• Muratart - stock.adobe.com

• Chor Muang - stock.adobe.com

Edited & remixed with permission under Standard License by Cameron Vaské

Part of the Renewing the American Republic Series

A healthy republic rests on three foundations: institutions worthy of trust, money that preserves economic integrity, and a civic culture of shared responsibility. This article is part of a series examining how each has weakened in modern America—and how each can be renewed.

Key Points:

• America’s elections tell two stories at once: the democratic ideal of representation and a system of incentives that pushes candidates toward money, attention, and polarization rather than broad public service.

• The problem is not primarily bad people but bad incentives. Even good-faith candidates are structurally constrained by the way elections, media, and campaign finance systems are designed.

• Our electoral systems—winner-take-all elections, polarizing primaries, media incentives, and expensive campaigns—reward conflict over cooperation and attention over honest deliberation.

• These incentives cascade through government, weakening Congress, expanding executive power, encouraging permanent campaigning, and eroding long-term policymaking.

• The result is declining trust in institutions—not because Americans reject democracy, but because the system increasingly struggles to represent them well.

• Restoring trust requires redesigning the incentive structures of elections and governance so honesty, accountability, and cooperation become the rational path.

A Tale of Two Elections

It’s the quintessential story of American self-government. An ordinary citizen runs for office, debates in public, earns the public confidence and votes, carries a community’s trust into government, and returns to account for what they did with it.

At least, that is the idea. It is the ideal declared at independence, enshrined in the Constitution of the United States, and embedded in the principles of the American people. It’s the yardstick to measure what we actually have and why so many Americans feel the gap between that intention and our reality so sharply today.

That story still takes place in America. But there is also a second story—one produced not by malice, but by incentives. An ordinary citizen runs for office, is forced to rally support and funding from large corporate donors, party machines, and wealthy individuals investing in their success in order to gain public attention. A climate of criticism and mudslinging negativity dominates the election, driving voters to vote for whom they least distrust against whom they most fear. The winner carries a community’s hopes and the title of public trust into government, but never escapes running for office.

Both stories are true. Often, they take place at the same time in the same election, even for the same candidate and constituency. It is a tale of two elections—one being had by the voters to choose who will be the candidate to win their vote, and one being had by the candidates to choose who they must be to win their voters. Too often, it is not a choice the candidate can make in favor of their constituency and still win. It is also often not a choice that voters can make and not lose. They are all incentivized, and so in some ways forced to compromise on their policies, politics, preferences, and ultimately their principles.

Some might say this system is intentional—and there is some historical truth to that. It is also true that the ability to amend, reform, and rebuild the country were intentionally encoded into the Constitution. Whether or not the results of our system of elections and government are what we would have them be, they are the product of design, and we are capable of redesigning them to align with our intentions for them.

What is important now is what our intentions are for our government and how we design our institutions going forward—according to what principles and for what desired outcomes.

Elections, Representation, & Governance

(Re)placing Blame

Core to the idea of the democratic republic is the idea of representation through free and fair elections. Our forebears famously threw a rather large amount of tea into the Boston harbor because they were taxed without that representation under colonial British rule. We have representation today, but the quality of that representation has been greatly diminished. For many, they feel completely politically unrepresented and like their vote doesn’t matter. Even if their ideas are represented, they don’t seem to be applied in good faith. All of that is corrosive to trust and faith in government, democratic republicanism, and in the maintenance of free and fair elections.

Simply put: You can’t have a method of ‘free and fair elections’ that doesn’t represent people well, claim that it does, have it work poorly, and expect people to continue to express faith and trust in the system.

Where I differ, perhaps from many people, is that I don’t think this is intended. Even if our founders had intended, in nothing but good faith, to have full suffrage, free and fair elections, and a functional and broadly representative democratic republic, it would not have been feasible, politically possible, nor likely technologically practical. The social science behind voting methods were still being elaborated at the time we designed our system of governance; the coalition to create a democratic republic with a federal system was delicate and conditional; and our technology was inadequate to communicate over long distances with anything more than a horse and rider.

I would argue, as a corollary to Hanlon’s razor, “Never attribute to malice that which can be explained by ignorance.” More to the point, it needn’t have been the case that the founders didn’t want us to have a more representative liberal democracy and effective republic; it wasn’t possible at the time.

Let me be more brazen about it. The same goes for every politician in America today. Whether or not they intend to discharge their duties in good faith on behalf of their constituents, the incentives that they face, and therefore that we all face, are largely stacked against their better judgment—not by choice or intention, but by design. This does not mean that any one politician fails to represent their constituency well, but rather that even good-faith politicians are structurally constrained from governing well consistently.

Certainly, there are politicians that make the choice to pursue interests other than those of the public. Conversely, there are politicians that seek to pursue the public interest at their own expense. Placing blame in this regard is largely immaterial to fixing the problem. Placing blame is the business of winning elections, today. Diagnosing the problem is the business of making government better, today. It is time we replaced blame with cause and condemnation with solutions.

What’s Broken and Why

In the United States, as in many other countries, we get ineffective “professional” politicians, even from among many good faith actors, because the incentive structure once a candidate decides to run is against both them and the public interest. Candidates face:

• a winner-take-all system for elections;

• primaries that drive them to extremes;

• media that rewards attention-seeking over fact-finding and good faith debate; and

• campaign financing that impairs their ability to compromise or fairly change their minds with new information.

Structurally, these create perverse incentives that fundamentally undermine what we intend for our government to deliver. For that, we should start at the beginning: elections.

First Past the Post

The idea of a ‘winner takes all’ voting system (often referred to as ‘first past the post’) starts from a very democratic intuition: whoever earns the most votes from the public should win. This is instinctively fair in its ethos. It’s dramatically unfair and unrepresentative in practice.

In a first-past-the-post voting system, the moment there are more than two candidates, every voter must make a calculation: “Which two have the best chance of winning?” To illustrate why, let’s take an ordinary voter and present them with three candidates, to keep it simple. Our voter likes candidate A a lot and candidate B a little bit, but is strongly opposed to candidate C. (Maybe even a little afraid of what could happen if they get elected.) The voter learns that candidate A is polling low, while candidates B and C are both polling pretty high. When it’s time to vote, will the voter risk candidate C winning? Probably not, if they’re thinking strategically. So, they vote for candidate B, reluctantly.

What started off sounding really democratic has our voter choosing someone they don’t most agree with, who doesn’t most represent them or their preferences, and whom they likely don’t most trust to prevent being represented by a candidate who represents them even less and whom they may fear taking office. Over time, citizens in favor of candidate A’s ideas stop running for office much, if at all. And despite having little to no representation, voters for candidate A may stop showing up to the polls.

Attention & Funding

In theory, primaries allow our voters and candidates a way around this problem—at least our disgruntled voter can influence the choices they’re given in the general election, right? In theory.

In practice, it’s unlikely our voter, or others who think like them, will be motivated to vote for two different versions of Candidate B’s general ideas, so many don’t vote in the primaries at all. In fact, only those who are most inspired by either primary candidate are likely to show up—and they are often the most ideological voters, tending towards extremes.

Both primary candidates and general election candidates therefore need to appeal to who is most likely to show up to vote, rather than the broad, general public—and most likely, without much consideration of our voter.

It’s natural for the media to cover what people will read, and what seems wild, scary, amusing, and outrageous definitely garners attention. The media is therefore incentivized to highlight the extremes more than they otherwise would. Meanwhile, our candidate A, if they’re running at all, may be more moderate, discussing ‘boring’ issues that make everyday government effective like incentives, trade-offs, policies, processes, and principles. Meanwhile, the mudslinging contest between Candidates B and C gains widespread and viral coverage.

To get more media attention—and therefore a chance at more recognition and more votes—candidates need to fund their campaigns for more media time, more events, travel, and advertising. They may appeal to grassroots support from an often cash-strapped public, appeal to a sense of patriotism, or commit to and likely compromise on issues they and most of their constituency may view differently to secure campaign funding from advocacy organizations that will partner with them.

If that candidate wants formal party funding, they must win and keep favor with the party leaders, and that’s often comes with strings attached to stay ‘on message,’ with a small margin for disagreement. Factoring in gerrymandering, and party loyalty and party funding matter even more, as parties partition the actual seats between them, and there is no longer much representation outside the local or national zeitgeist within either party.

Even if all candidates are running in good faith, with good intentions, genuinely willing to compromise to get things done, and open to changing their minds when presented with new information, they’re strapped in from all sides. And all of this to run to help solve what is likely a basket of core concerns that motivated the candidate to run in the first place—and the burden of addressing everything else while in office.

These aren’t new critiques. Advocacy organizations, activists, scholars, actors, and even politicians have drawn attention to these problems (and others) for years—with varying degrees of success in helping States and localities enact more representative voting systems and reform campaign financing. Polling of Americans shows widespread support for electoral reform and abolishment of the Electoral College, broadly.

The institutions are slow to change because interests—incentives—have entrenched existing systems. They require widespread awareness and support to align political interest with the public’s interest, which is exactly the challenge the system currently presents.

And nobody even has to try to stop the system from changing to make changing it difficult.

Corrupting Politics

“Wherever there is interest and power to do wrong, wrong will generally be done.”
– James Madison

Elections are how we select who goes into office to run the institutions; being good at winning elections is how we determine who stewards the institutions, and therefore, how the institutions themselves function. Being at least marginally competitive in the election we just laid out, with all its flaws, is a precondition for meaningfully running for office.

Candidates must be good at winning those elections, or they will not serve in office, and therefore, often, will not run. Even those that would prefer to better represent their whole constituency must change how they run for office.

As a result, even good-faith candidates who seek to run their campaigns more positively and appeal to their entire constituency are often prevented from doing so. Their behavior is constrained by the incentives they face to win elections. Not only do our elections not incentivize broad representation, honest debate, and compromise, but they often punish that behavior by opportunity cost, especially when elections are won by thin margins.

Systematically, our voting system selects for politicians who:

• Raise lots of money, or who are independently wealthy;

• Gain lots of attention, repeatedly, regardless of how they do;

• Cater to their primary voters, party elite, advocacy groups, and corporate funding;

• Compromise on principle, lawfulness, and good governance to earn the votes that count; and

• Either make the public more afraid of their opponent than they are of them, and/or, more rarely, make the public more hopeful about them than they are their opponent.

Because the winners take office and the losers do not, we get politicians that are exceedingly wealthy, that do seek advocacy organizations and business funding for campaigns, that do play politics more than advance good-faith dialogue, that are willing to compromise on their principles, and that do inspire fear and submission more than they do hope or compromise.

This is not intentional. This is by design. And the design—if we are to take our founding documents and each other at our word—was not intended to cause this.

This is also not a problem unique to any party or politician. Those legislators with independent wealth or unusually safe seats have more freedom to deviate from party or private interests and incentives precisely because they would otherwise have to cater to moneyed constituencies. When this is the case, we further incentivize politicians to seek wealth—including through insider trading and other conflicts of interest.

The more that money and influence are prioritized as a condition to win, the more they become necessary to accrue and the more pressure there is to accept money and influence from sources that both voters and candidates would rather not. It is not by accident or intent that American elections are the most expensive in the world—it is by poor design.

Our elections require no villain, no enemy, and no amount of malice to become as hostile, dysfunctional, and divisive as they have today. That means no hero, no ally, and no amount of benevolence, alone, will fix them. They must be redesigned.

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Crumbling Faith in the Institutions

America’s electoral dysfunction stretches far beyond any one election cycle. Our institutions are comprised of the people we elect to lead us and represent us. From members of the U.S. Congress and the President to the State Governor and the Assembly to the local Town Hall—all of them, and all the people they appoint and confirm—they are the stewards of our institutions. They become the embodiment of self-government in practice.

There’s an old joke that a politician’s first job is to get elected and their second job is to get re-elected. Translated, this means that to achieve anything, you must win an election, and to stay long enough to achieve anything else, you must win again. Our stewards are still running for office even after they take office, and that often takes precedence over their decision-making.

This isn’t inherently bad. We want our officials to be held democratically accountable for their actions. That, too, is by design. We want to incentivize them to act on our behalf, and do so with the public’s best interests in mind. We’ve already established that our system of elections does not prioritize the public’s best interest—so what does that mean for the institutions?

Let’s assume an entirely good-faith, well-meaning, competent representative in Congress that intends to continue serving the public interest, and so seeks re-election. Here are the headwinds they face as soon as they take office:

• Because the representative will run in a winner-take-all and loser-take nothing race, they’re incentivized to show and claim they’ve gotten things done, whether they do or not.

• If the representative is in a gridlocked majority, the representative must become good at seeming like they are achieving something to the public, whether actually or not.

• If our representative is in the minority party and can’t achieve much, they may be incentivized to show their base that they’re stopping the other party from getting their agenda done.

• Their future opponents—and anyone in minority opposition to them in Congress—are incentivized to condemn them for failing to achieve what they set out to do or to argue that what they’ve done was harmful, setting up another negative campaign cycle.

• If a party is clever and not acting in good faith, they might choose to avoid solving everything they sought to, or to manage rather than fix problems to preserve issues they can campaign on—because they are incentivized to win a narrative.

• If the party chooses to avoid or manage problems, they are incentivized to blame the President for failing to execute policy well or to blame the other party for stopping them to deflect from their primary incentive-driven motive.

• When all the above happens frequently and by many representatives at once, they may convince the public—truthfully or falsely—that the opposition is indeed working to prevent them from legislating, rather than working with them towards compromise. This only serves to reinforce their incentive to claim that the opposition is working against them even more.

• If the public becomes highly agitated, our representative is driven to heighten the tone of their rhetoric to keep attention—especially if they want or need the media attention for their next run. They may start to name the opposition as enemies, rather than colleagues with different ideas and preferences for solutions.

Let’s say our representative wins in this environment—whether or not they engaged in name-calling and exacerbating rhetoric.

• And now our representative has won the election on the idea that they and their party are in office to ‘beat the bad guys,’ and their constituency is going to demand that they do—and perhaps even punish the bad guys. (It can become particularly uncontrollable if there is any truth to those claims.)

• If rhetoric accelerates on both ends of the political spectrum, threats of political violence might even increase—making the job of being an elected official even less attractive to the kinds of people interested in solving problems in the first place.

Even if our representative means to do well, in practice, they constantly face incentives —and political pressure from their colleagues who face the same incentive structures—to capitulate to this behavior.

Now imagine a new representative joining this environment. It must look and appear as though Congress is a hostile environment. They may even believe the rhetoric of their predecessors, and it may even become true.

Cause precedes effect and effect becomes the new cause. Congress becomes more dysfunctional because there are so few incentives to work in a bipartisan fashion, and so many more to work against bipartisanship.

In this light, it is almost a testament to the American Congress that there is bipartisanship at all. It requires moral heroism and truly deft politicking to achieve much, fulfill the public interest, and still win the next election. But moral heroism and political mastery should not be a precondition for good government.

Any system that requires both to work will inevitably deliver less. It is unsurprising, then, that Congress passes less legislation every year, that Congressional representatives find their jobs miserable, and that the public trusts government less.

The Cascade Effect

We’ve systematically created a dysfunctional Congress that is encumbered from passing legislation. It might follow, then, that when Congress fails to act, the President can temporarily step in and resolve problems by exercising emergency powers—especially if Congress sits on something long enough for it to become an emergency.

Except that it’s not really an emergency for the President to handle, but one created by Congress’ inaction. The President taking action to solve a problem that Congress should resolve only reinforces the incentives for Congress not to act; the consequences of failure to govern in Congress are lesser, and perhaps morally easier to stomach for some of Congress.

Governance by the executive only reinforces the erosion of legislative primacy and reinforces the “imperial presidency” of government by decree. These take place through executive order, emergency powers, administrative centralization, national security overreach, and foreign policy autonomy to handle what should be the normal process of governing by Congress.

However, the electoral challenges faced by Congress are also shared by the President; Presidential elections are also a winner-take-all, loser-take-none system. The President is incentivized to argue that the opposition party is trying to stop them, win symbolic victories, and blame Congress—whether Congress is actually to blame for any given issue or not. Presidents are therefore also incentivized to exercise any power at their disposal to win public favor, protect their legacy, and increase the popularity of their party for Congressional races, so that Congress can pass and the President can sign legislation. This creates a ratcheting effect—Congress is less productive, and the President pursues more authority and accretion of power.

However, parties eventually and inevitably lose the Presidency. The Presidency then flip-flops between Presidents of opposing and increasingly adversarial parties that undo most of their predecessor’s unilateral actions and begin using the precedent of executive orders, emergency powers, and weaponization of institutions—in large part to signal their own efficacy to their own base for their own next election.

By this point, not only have we systematically made Congress inept and the Presidency too powerful, but we’ve made policy inconsistent and temporary, long-term planning fragile and difficult, and coordination and compromise next to impossible.

When policy is inconsistent and long-term regulatory clarity is vague, businesses can’t plan for the future well, nor can wealthy individuals, partisan activists, or advocacy groups be confident in the permanence of any solution. This incentivizes these groups and individuals to cement themselves as semi-permanent lobbyists, which reinforces the cycle of politicians seeking their funding, political credibility, and partnerships for the next election, constraining their decision-making.

Americans aren’t blind to any of these factors, individually or in small sequence, either. The public can see and feel problems not really getting solved, laws not being passed, and the conditions of their lives deteriorating. When the mudslinging is constant, neither party looks particularly trustworthy. When promises are made—and broken because of electoral needs—voters feel betrayed. Few are willing to take the government at its word and look for people, individuals, groups, companies, or other factors to blame.

Voters understandably become agitated, angry, and hostile, willing to seek radical change to address their grievances and problems.

This process only raises the stakes for politicians to appear honest and transparent, avoid admitting when they are wrong, assume no accountability, and blame any failure on their political opponents, business interests, immigrants, billionaires—anyone else. It also incentivizes the next generation of politicians to appeal to the angry populace—which creates populism. The more successful the populist politician, the more they commit themselves to whatever understanding their new voter base believes, including and most especially the most outrage-inducing passions—even when they are false. Inevitably, rhetoric meets reality and the electorate is disillusioned, indignant, and angrier than before.

No wonder Americans are losing faith in their institutions and democracy.

It isn’t that our institutions lie to us, but that we have rendered them incapable of telling the truth by design. When stewards of our institutions cannot tell the truth, trust is broken. When representation is skewed in our democracy, credibility and accountability are compromised.

And it started with incentives. Incentives behind elections. Incentives behind decision-making. Nobody in this entire process must be a bad person for this system to give us these results, and no good person is immune to them.

The answer cannot be to insist that this system works, to demand moral heroism, or to insist that the institutions are sacrosanct any more than it can be to insist that tearing the system down will give us better results.

We must redesign the system so that it works the way we intended it to.

Towards an America of Honest Institutions

A government of the people, by the people, and for the people, must rely on its integrity and the truth. Honesty is therefore not a negotiable quality for a democratic republic, either in its composition, its deliberation, or its delivery of good government. Honesty in government is more than just telling the truth—it is rewarding the telling of truth, by design.

Without honest institutions, representation becomes distortion, deliberation becomes division, and stewardship becomes custody. Without realigning our incentives, institutional drift will carry us away from a self-government towards a government by the people for the powerful, whether any one of us means for that to happen or not.

Today’s America is not the only way we can realize our democracy or preserve our republic. We can renew the institutions by realigning our incentive structures to secure for the American people a self-government of greater liberty, opportunity, and prosperity. A government we can not only trust, but verify. A government of honest institutions.

That starts with fixing our elections.

We must realign the incentive structures that help shape our decision-making to restore trust and credibility. (Continued in Honest Institutions (Part 2)). Any renewal to achieve this must consistently:

• promote political representation and participation through deliberation and good-faith debate;

• encourage cooperation through compromise and coalition-building;

• guarantee transparency and legibility;

• reward due process, truthfulness, and evidence-based justification;

• align authority with responsibility, accountability, and local knowledge;

• constrain discretionary power through enforceable rules and credible emergency guardrails;

• reduce capture and corruption by simplifying incentives and hardening oversight;

• reward long-term stewardship over short-term performance; and

• build feedback loops that make learning and course-correction normal, not scandalous.

This is not a call for perfect leaders or perfect citizens, nor is this an argument that nobody can be blamed or held accountable for their actions. This is also not an assertion that fixing our electoral system will, like magic, fix all other challenges facing America, today.

It is a call for systems that make honesty the easiest and most rewarding path and evasion the hardest and most costly. It is an argument that we cannot expect people to consistently choose what is politically and personally costly over what is politically and personally profitable. It is the bold assertion that fixing our elections is and must be the first step to addressing the challenges facing America, today.

The point of a government of the people and by the people is to build institutions that work for the people. Government is one of many tools we have to address our common problems. If the tool that we use to fix problems is not only broken, but causing more problems, then we must start there.

We need to make it possible for ordinary people and ordinary leaders to tell the truth and win, to keep their promises, and to bear the consequences of their choices. When costs are visible, authority is bounded, and accountability is traceable, honesty and cooperation become rational again. That is the foundation of a democracy we can trust and a republic we can verify.

That is how America’s institutions lost trust, and the key to earning it back.

Up next in this series: Honest Institutions (Part 2): Renewing America's Democratic Republic (coming soon)

(Like what you read? Help me fund the coffee that goes into these articles by pledging to my publication.)

Image created and generated by Cameron Vaské with Grok, inspired by a previous image used for this article:

Original Photo (Free to Use License) by Edgar Arroyo: https://www.pexels.com/es-es/foto/edificio-del-capitolio-de-los-estados-unidos-en-washington-dc-33416099/

[Edited] with permission by Cameron Vaské

Thirty-five. That’s about how many hours I think I slept since I started writing, maybe nine days ago, till when I stopped and started over again two days ago. You may have gotten less in that time. The news this week was exhausting on its own. The Pentagon ultimatum to Anthropic. The potential asset markets crash. The escalation between the United States, Iran, and Israel. The back-and-forth in Washington over the State of the Union. The debate over AI—is it a market bubble about to pop and crash the economy, or is it actually working and about to replace most of our jobs?

It’s been a week, and I think I’m not the only one who is tired.

Fifty-eight. That’s how many pages I wrote at first. (Don’t worry. They’re not in the room with us.) The whole week I was also trying to balance ‘this needs to be understandable and compelling’ with making it evidence-based, intellectually coherent, intellectually humble, honest about risks and where I’m making assumptions, and invite criticism. I figured, “Well, this will have to be spliced into multiple articles, anyway.” I still plan on doing that.

Arguing with myself.

But right around Friday, I hit a big brick wall. That wall was credibility. Now, I think I know things, but I also know I can be wrong. And yes, I know I’ve done enough homework to think I can write on this, but nobody else does. I’ve been writing, studying, researching, and thinking privately all this time. How can I tell share what I think is a big, cross-domain theory of what’s wrong that people need to hear with no ‘formal receipts’? Who’s going to take that seriously? Would I take that seriously?

There’s an old quip often misattributed to Mark Twain I like:

“Better to remain silent and be thought a fool than to speak and to remove all doubt.”

(Also, and facetiously—never actually look up whether a famous person said the famous quote you like. Totally ruins it.)

That’s more or less my thinking a lot of the time when I’m thinking about writing on the inter-webs. I’m not a fan of the idea of writing when you really have little idea what you’re talking about, but I also like the idea of ‘proof of work,’ engaging in dialogue, and testing ideas publicly. Refining them when you learn new things. That seems honest and fair to me.

But, how are you going to test ideas without engaging others or seeking engagement, and therefore, attention? It takes time to do all of that with presence of mind and thoughtfulness—and like I said, we’re all tired and maybe a bit frightened of the world right now.

And then, there’s the internet. Takedown by ridicule. Ad-hominem attacks. Straw man arguments. Nobody wants that. And maybe that’s just the price you pay for posting on the internet. It certainly isn’t the ‘democratic commons’ of public discussion and debate I wish it were, much of the time.

So, say something, share something, write something thoughtful that would grab the attention of someone who might have the time and engage you in good faith. Who’s looking to challenge their priors, too? Find those people. There are only so many people I personally know that I can cajole encourage to engage me here.

Okay, but the experts in their fields are also here, and I want them to pick these ideas apart too. Methodical specificity and scientific argumentation are important. How do I write to engage anybody? After all, I think these ideas deserve general discussion, as well as expert critique.

Initially, that led me to write in a ‘conversational’ tone with lots of data and links here on Substack. But that also seems to lack seriousness in both tone and substance. But if I write too seriously, that could turn off public discussion, and I don’t want to write like it’s coming from the ivory tower, either. How do I find that balance?

These are arguments I’ve had with myself and questions I’ve asked myself countless times, and frankly, I’m still wrestling with. I’ve gone around that merry-go-round for a hot minute, and I’m pretty sure it never ends.

None of that feels productive, even if, in a twisted way, I feel better and more justified for having the argument with myself. I’ve written a lot, sure. But I still haven’t published anything.

So I figure, “You know what? You can just do things. You don’t need anyone’s permission, and if it lands, it lands. If it sucks, it sucks.” But I’m still obsessing over getting it right. Most right. Mostly right. Something right.

So you know what would be good? Go engage with other people specifically on this. I’m already following, reading, listening, and when possible, talking with a lot of people I think have good ideas and know more than I do. That’s good practice anyway. Go find people you disagree with and listen to them. When possible, argue (in good faith) with them. Get pushed back and rethink things, too. “That’s good. I should do that.”

So, between writing those fifty-eight pages, I read. So much. I reached out out to folks doing the writing. I attended panels and seminars. I had one-on-ones with some really bright folks writing on these things. Really, I found myself grateful and pleased they would take the time to talk to someone passionate about what they were working on and thinking about.

Everyone I talked to, everyone I listened to, was smarter than me in their field or in some way. Most of them by miles. I learned a lot. I questioned a lot. I had some questions answered. That was good. And those motives were good. I started a lot of really interesting conversations—and hope I can make them valuable to them, too.

But I also realized there was an additional motive I hid from myself. I’ll also feel better about writing publicly if they seem to think there’s ‘something there’ in the questions I’m asking and the ideas I’m posing, and I’ll also feel better if I go and find they are working from a similar problem framing. And, broadly, that worked out.

But that’s its own problem and its own argument. I want to be right, and I do want to be right because the ideas and conclusions I arrive at are right, not because I’m persuasive or can argue my point better.

Now, I can be intense. I’m very passionate about learning things, studying problems, and then using what I know to help solve problems that ultimately help make people’s lives better. I think most people are that way. It’s what led me to pursue international affairs and economics degrees as a pathway to contribute to good, long-term U.S. foreign policy.

But, the more I studied, the more I realized that any long-term foreign policy these days suffers from whiplash between administrations and, often, an inability to ratify treaties in Congress due to their near-instant politicization. Inertia kept me going in the direction I was going in. Plus—totally different, complex problem set. Not my area of expertise. ‘Maybe that problem gets worked out anyway, and maybe I can just work in my little corner on the problems I can help solve, now.’ I’m no true expert with years of experience in my field, but I know enough to be useful to a variety of problem sets. So, I kept going, but started studying the problem of democratic durability and social choice theory of elections privately out of curiosity and interest.

That was 2016. Ten years ago.

Cue the other argument I’ve been having with myself for ten years:

Is it all just working itself out? Eh, not so much.

Does it look like it’s going to? Not without help from somewhere.

Well, is it getting good help from somewhere? Yeah, lots of places, but that doesn’t seem to be working, either.

Well, is there a way I can help? I don’t know. Maybe. It’s a democracy, and it’s your country, so if you can, grab a bucket.

Okay, but, we need more than firefighting. This looks structurally unstable. Plus, I don’t have primo-firefighting chops or access. Yeah, that’s true. Can’t keep going this way. And yeah, you’d need a lot more experience and exposure to do that.

Is anyone working on the structural problem? Yeah, sure, lots of people. Some are looking for more help and asking some of the same questions you are.

Great. Let’s do that. Okay. You need to learn a lot more. Plus, what makes you think you could do better than they are already?

Good point. Am I needed here? It better not—you’re not that important. You’re one guy. It better not need you. But maybe you could add value. Besides, what kind of hubris is it that makes you think you could make a difference?

True, and it wouldn’t just be me, either. But, isn’t that also the point of a democracy? Shared responsibility? Well, yes. But, listen to experts and people working here, first. There are way smarter people on this than you to go fix that.

And this would stop my arguing with myself for a good bit. Maybe a year. I read. I listened to podcasts, panels, and events. I followed the people I think are taking a smart approach to understanding these problems in the most principled, good-faith way across social media and traditional outlets. I worked to figure out what they are doing to fix this to see if I could help—or learn to help.

I still do this. I still think this is critical to do. But inevitably, I would ask myself:

Alright, I’ve been reading and listening to these people for a while, and I’ve learned a lot. Much better understanding of the problem. But these people are also really spread out and having a hard time gaining traction. Also, haven’t we all been at this for a while? Like, decades and decades? Well, yes. Reform takes time. Plus, as you know, there’s a lot of other obstacles to overcome in that process.

Okay, but, that’s also been true for a while, and things aren’t getting fixed, and they seem to be getting worse. So, what if I’m right and there’s more to the problem framing? Let me ask you a better question. What makes you think you’re right about that?

Good question. I don’t know if I am, really, and I’ve been wrong before. How can I find out if I’m right about this? Listen to their problem and solutions framing. Talk to them, if you can, and get them to poke holes in it where they can. Maybe they recognize it, but are just speaking from their own point of expertise.

Right, but how do I do that? I mean, listening—yes. Can and will do. But if I do think there’s more to it, how do I engage them or the general public about this in writing or speech? Well, on merit of the ideas. People will listen if you have something to say.

Okay, but the problem set framing is massive. Like, you-can’t-solve-this-in-one-go-big. What if that comes across as naïve idealism? Yeah, fair. Is it naïve?

I don’t think so. I wouldn’t say problems can’t get that big and complex, and I don’t think anyone would really argue that we have huge, complex problems. Okay, is it idealistic?

Well, if the problem needs major reform to ever get fixed and discussion of those issues on a high level, first, is that not realistic? Touché. Is anyone talking in those terms, though, and willing to argue in those terms?

Some people. Most jobs don’t pay you to talk in big ideas like that and most people don’t have bandwidth for problems you can’t solve in a shorter period. True. Also, you lack the pedigree for that kind of assumed credibility with most people. Credibility needs to be earned through proof of work. Can you prove you know what you’re talking about?

Only some of it—but I also hold that I could be wrong. And besides, most of this has been private study before I open my big mouth, remember? Okay. So why don’t you just write about them?

Same problem—how do I test big ideas without engagement? You can test them in private.

And then I’d stop and test these ideas in private. I’d read even more. I’d model. I’d reason. I’d try to figure out how, in an ideal way, could we design these systems to work. I didn’t keep track of it, but the amount of time I spent modeling solutions from what I’d learned—and learning more as I ran into new challenges and questions—is definitely in the hundreds, if not thousands of hours. I’d test them in private conversations with people, and get some meaningful criticism, but not much.

Eventually, I’d come up with something that I thought would really work, or at least, something that would work a lot better that needed more testing and debate than I could muster on my own. Something draft enough to be a potential solution.

I still think that’s critical. Still doing that. But I’d start a new argument with myself:

So I tested them by myself and with a lot of people in private. I can still be wrong. Then what? What actually gets solved if nobody else is following that proof of work and poking holes where there are problems? Well, then test them in public.

Don’t I need to state the strongest theory of theory of the case though for it to be critiqued? I do want to steel-man the argument. Doesn’t that make me look kind of crazy? It might. And that could read really unserious if it’s not well-cited. Can you make it short?

Sort of? But it’s big and complicated, and I need to both explain it and cite where I’m pulling from. But if you make it long and substantiated, few people will take time to read it without you having formal credentials.

True. Where’s the balance there? Somewhere between piquing curiosity and substantiating most of the argument.

But if it’s not relevant to things we can do immediately, today, will people read it? People read all kinds of stuff that’s not relevant to things we can do today all the time. You read an article about space travel like five minutes ago. It doesn’t have to be perfect.

But is it good enough, and if it isn’t, am I wasting my time here, then? Do you think it’s good enough? Do you think you’re wasting your time?

I’m not sure—I don’t know what I don’t know. But, no, I don’t think I’m wasting my time—this is important. We all need to pull together and give out best ideas to fix this thing. Then what do you want to do?

Well, is there a way I can help? You already asked this.

And this whole meta-argument has been playing on a loop in my head. More or less for years. I still have lots to learn. But it’s time to get off this ride.

Getting off the merry-go-round.

I have absolutely paralyzed myself circling around this logic in my head. Many times. I think this conflict is actually necessary and good. I think I know things, but that doesn’t make me right. The conflict keeps me humble about what I do and don’t know. But if the argument itself has taught me anything, it’s that there is a balance somewhere between:

• putting it out there and thinking it through

• earning credibility to speak and providing proof of work

• honest conviction and humility in uncertainty

• learning by listening and learning by doing

• urgent action and patient reflection

I know only two things for certain:

1. I will get it wrong. Somewhere. Somehow. About something. Virtually guaranteed.

2. Doing nothing until I get it right achieves nothing.

So here I am. I woke up like I woke up most of last week, but with more sleep, more questions, more patience and less urgency.

Saturday 4:11AM. That’s when I started writing Saturday morning. It’s 8:35AM now. In that time, what might be another war in the Middle East has started. Yeah, the urgency is coming back. It took another day and some hours to do everything I needed to this weekend, and then to follow the news to figure out what’s going on and how it will impact me and my loved ones. Another major war has effectively started in the Middle East without Congressional approval, public debate, or (at least it seems) thorough consultation with and support from the allies we depend on.

The economic impact in the price of silver, oil, gold, and other assets and commodities spiking—several of which the overleveraged AI sector depends on to deliver profitability—along with the closure of one of the largest hubs of commercial and financial activity in the world in Dubai and the Strait of Hormuz could send the global economy into a big tumble.

Monday 12:33AM. The urgency is back. I’m still awake, and back to writing. I’m more invested than ever in figuring out how we can right this course before it’s totally irreversible. In our governance and politics, in our work and the economy, and in our society and civic engagement.

But more important here is that I—that we all—balance that urgency. If you have seen any of the notes I’ve published in the last week, there’s been a theme. It’s the same theme for just about every thought I had all last week reading, attending seminars, speaking with people, even networking for purpose and networking to find my next job.

It’s the truth and the through-line of just about everything I aim to write about in The Commonwealth Perspective. It’s all about how we make good and lasting individual and collective decisions.

Urgency is good—it means you care. You recognize the need for action to change the outcomes for the better. Your intentions are good. But intentions aren’t enough to achieve good outcomes.

Intentions need to be funneled through good process, and good process is defined in no small part by good incentives. What is rewarded by taking the action you want to see taken, and what is made more costly? To whom? When? For how long? Is it visible? Is it measurable? Can we see what happened?

Intentions, process, and incentives also need to align with your principles. You can’t just espouse principles, either, but live them. Action aligned with principles requires repetition. Action misaligned with principles needs correction. Only then do principles beget reliability, and reliability begets trust.

Only then do you get sustained positive outcomes without breaking the system you want to create or repair.

My argument with myself has been that I should write, but that I can’t get the process right, and I might be wrong and inadvertently violate my principles and get bad outcomes. Acknowledgement of that is important, but I can’t in good conscience not act either. There is no value-add to anyone, if I don’t, and I can’t very well improve the outcomes, follow my principles, nor contribute to the betterment of my country and the world by sitting here arguing with myself forever.

This is the challenge facing America, too.

We have, the vast majority of Americans—and indeed human beings—good intentions. We all want for better outcomes. We think we know things—and many of us do. Yet many of us are too quick to act without considering the incentive structures we’re creating and the principles we may be violating—even when we’re acting out of good faith. Urgency becomes blinding. Moral certitude in urgency feels like it justifies emergency response without thinking through the whole process. It feels right.

Many others are too slow to act on their good ideas because they either believe they need more information before they do for fear of being wrong, or for disillusionment that action can be meaningful anymore. Patience becomes passivity. It feels wrong, or pointless.

It’s an argument we should all have with ourselves and—humbly and in good faith—with each other.

So, before I tell you what I think I know, let me say this: I am wrong. Somewhere. About something. Help me find where. We do this thing together, as long as we are willing.

Prove me wrong, please.

Having laid myself bare, here’s where I’m coming from. Please, if you can, prove me wrong. I will aim to argue with you respectfully. Please argue back.

That same process: Intention to incentive to principle to outcome. That is what’s broken in America.

Democracy & Governance:

Intentions: We intend to elect leaders and representatives who represent all and each of us and work in the public interest. Good faith candidates intend to win honestly, represent their constituencies well, and do what they genuinely believe is in the public interest.

Incentives: Our electoral and governmental processes incentivize politicians to be polarizing figures, seek private or partisan funding to gain the attention and capital to run for office, represent small constituencies, gridlock good governance, and govern outside the public interest. In response, citizens either disengage entirely or engage even louder for their candidates to win—to do the right thing—driving partisanship and media further in a frenzy, and lose faith and confidence when the problems don’t get solved.

Principles: We intend to practice democracy well. Our process doesn’t achieve that outcome because incentives are poor. This violates our principles for a government of, by, and for the people. It also violates the principles inherent in honest politics and good governance.

Outcomes: We get the poor outcomes we see today. Politics divided, legislatures absolving their responsibilities while executives overreach and courtrooms are overloaded with cases. Representatives and leaders preaching and fundraising rather than representing and governing. Choice and faith in democracy and government are declining. No amount of morally exhorting politicians to do the right thing fixes this.

Even if everyone was trying to do the right thing, in good faith, we still get poor outcomes. The incentives are broken and we’re violating our principles.

Work & the Economy:

Intentions: We intend people to be able to freely and consistently find and seize opportunity for work, labor on those opportunities, and gain and retain the value of that work. In turn, we intend for the economy to grow sustainably and create more opportunity. To help achieve that, we intend for government to assist in guaranteeing the stability of the system, equal access to opportunity, and protection of value created from work.

In total, we intend for the economy to be stable, balanced, and to grow sustainably.

Incentives: Our system doesn’t do those things well because our monetary system incentivizes deficit spending, debt accumulation, and volatility. Work isn’t reliably stable because the businesses aren’t reliably stable because the banks aren’t reliably stable because the money isn’t reliably stable. The number of perverse incentives ripples outward in a cascade—and at each stage, we have responded in urgency to crises that bandages the problem temporarily, but ultimately makes it worse. It rewards volatility, speculation, and unsustainable growth.

Principles: In the process of bandaging the problem, we violated our principles. We privatize gains and socialize losses. We create less opportunity for ordinary people. We erode the stability of the system. We break the inherent promise that if you just work hard, you will earn more—and that those earnings will hold their value.

Outcomes: We try to use the tools we have to work harder, longer, and faster without reliably earning more. We get banks and businesses that make risky decisions with people’s money. We get governments that have to spend more than they have—and always end up costing their citizens more in inflation and interest on debt they didn’t want.

Even if everyone was trying to do the right thing, in good faith, we still get poor outcomes. The incentives are broken and we’re violating our principles.

Society & Civic Engagement:

Intentions: We intend for our society to be pluralistic, but unified. We intend to be welcoming and supportive of our neighbors. We intend to debate and discuss our problems honestly and in good faith with one another to solve problems in our common interest to our mutual satisfaction. We intend to do right by each other.

Incentives: Our system doesn’t achieve those outcomes because we have created societal distrust. We don’t understand why money and politics are broken, and so we look for blame in each other. We have isolated ourselves behind our phones and keyboards and no longer see each other as trying to do the right thing. We don’t understand each other’s point of view or why everything is breaking, and so find malice where none may exist. We lose faith in our leaders, in our future, and in ourselves.

Principles: In the process of trying to fix this—to do the right thing by one another, we look for likeminded people to support to fight what’s broken and fix it—we fragment our society. We collect ourselves into groups dedicated to solving the problems we can see before us, that share our understanding of what’s wrong. And then we fight each other when we see them get in the way, because we don’t understand each other. Our civic engagement breaks down into conflict.

Outcomes: Society breaks apart into camps dedicated to opposing one another, and civil discourse turns into uncivil shouting matches. Reason and understanding lose their meaning when we fight each other. We pull on loose threads trying to fix our society and the tapestry of society starts to unravel. We engage each other to understand our problems, but isolate ourselves from whom we disagree like oil and water. Civil discourse becomes coded into a language that neither side of an argument can understand.

Even if everyone was trying to do the right thing, in good faith, we still get poor outcomes. The incentives are broken and we’re violating our principles.

Society and civil engagement is the least broken of our three pillars, but it’s also the most fundamental. It’s also what needs fixing first. We need to understand each other—and what and why our money and politics are broken.

And that’s why I’m here. That’s why I’m writing. That’s my value proposition to you. Not to deliver understanding like ‘the answer.’ But to engage and encourage curiosity.

I want to know what you think. I want you to want to know what I think. I want you to want to know what others think. I want to— no, you get the idea.

Then I want to facilitate understanding. Not noise. Understanding. Data without rigorous analysis is noise. Data with clear analysis is signal. Is understanding. Every I-stubbed-my-toe post on LinkedIn is about this. But there’s also a reason for that. (Even if it drives us nuts.)

See, I think I understand this. I think I know things. I want to figure out if my analysis—if my understanding—is wrong, with you. Maybe I’m right—and we can get design better solutions with better analysis. With better understanding.

So come challenge this. Break it if you can. You may still walk away without convincing anyone or being convinced. That’s okay. Let’s keep talking.

And hey! If you don’t—that’s fine. But think about this when you go solve your next problem. Maybe something simpler like gardening or welding or designing a website or loading a truck. Maybe while thinking about politics or listening to someone you disagree with.

What problem do you intend to solve? What incentives does the solution or process create? Does any of that violate your principles? Does the outcome match what we intended to begin with?

Asking better questions can help us understand our politics, governance, economy, and each other a lot better. They can make us curious.

Let’s go be curious, together.

Photo Credit: Photo by Pixabay: https://www.pexels.com/photo/white-ruled-paper-99562/

While more comprehensive reform is necessary to reform the structures of power that govern the actions and oversight of executive bodies, monetary and fiscal policy play a large role in the incentives and disincentives that shape decision-making and restrain government overreach. If the state can fund coercive capacity without visible cost, it will expand it. If cost is visible, it must justify it.

Sound Money is a Democratic Restraint on Government Spending

Money, at its core definition, is a ledger for payments and savings. It’s a claim on future value and a unit of account. In a democratic republic, citizens collectively choose representatives to make decisions on their behalf in the public interest and grant the state the authority and legitimacy to collect taxes from the public to execute those decisions.

Up until 1971, the United States largely operated under a ‘sound money’ regime—a monetary system in which all currency is backed by assets that retain their value over time.1 Today, the United States relies on a ‘fiat money’ system, wherein the money supply (the amount of Dollars in circulation) is not directly tied to possession of hard assets, enabling the government to expand or contract the supply at will. (Watch Lyn Alden’s short video summarizing her book ‘Broken Money’ for more.)

So, what does that have to do with government restraint and law enforcement? Quite a lot. When government can (and does) expand the money supply (i.e. issue more dollars), the government can do so in order to finance its existing debt and costs and can more readily assume debt. Moreover, the government can spend more money than it has to pursue expansive policies, including for law enforcement or immigration and customs enforcement, and has no meaningful short-term political cost from taxation for doing so. Effectively buy now, pay later. (This not only comes at the cost of eventual inflation when in excess, but also removes constraints on government spending; when government can spend more than it actually has, it frequently does.)

Not only are democratically-elected representatives no longer bound to a budget based upon real government revenue from taxation (and other sources), but they are further subject to the political whims of the electorate and other influential elites, including other branches of government. In essence, because there is no immediate economic cost to taxpayers from increased taxes to pay for increased government spending, there’s no political cost to politicians for doing so.2 The cost—largely borne later in the form of inflation and further tax burden from interest payments on federal debt—is delayed into the future and obscured from the public.

Here’s where law enforcement comes in. If Congress—or any state or local legislature, for that matter—seeks to raise taxes to sustain an increased law enforcement or federal action, they may presently do so without immediate cost by ‘printing money’ that didn’t exist yesterday to pay for it and assuming the rest in debt.3 In other words, there is no credible financial deterrent in the short term to do so. Government can simply choose to do so and pass the burden of payment on to future citizens, obscuring the cost in the present. Much the same way that predatory credit card loans operate, favorable loans are guaranteed in the present at great cost in the future.

Under sound money, that tax burden would be anticipated, debated, and felt as soon as any expansion in spending took effect because the government would not be able to finance itself by simply expanding the money supply, and loans will require greater scrutiny and more strict repayment conditions. The government would need to raise taxes to pay for the expenditure. If taxes rise, goods and services would cost more (if added to a value added tax, or VAT), or end-of-year taxes would be higher. Alternatively, if taxes already levied for a specific purpose—say, increased support, training, and equipment modernization for law enforcement—were re-appropriated for another purpose, citizens could directly tie the shift in funding to that action and would witness the lack of previously planned spending.

The relationship between increased costs and a given policy could still be obscured or hidden from the public in some measure, depending on where and how taxes are raised (one reason to consider shifting towards using a VAT-dominant system). Nevertheless, as the public anticipates or experiences the increase in taxes, the public could then weigh the cost of any increase against the benefits of government action, and then communicate that support or opposition to their representatives.

Politicians and representatives would have to debate and defend taking more of their actions and expose themselves to the political cost of ignoring their responsibility to the public and to meaningful policymaking. “Do we fund X by raising taxes on Y, cutting spending to Z, or borrowing to pay with interest?”

With more public scrutiny comes greater incentive to improve process, align funding with public priorities, legislate, and adhere to the law. Law enforcement and federal agencies that are both empowered and restrained by the political will of both the public and elected representatives are more likely to respect civil rights and engage in due process.

To be clear: fiat currency does not force abuse of civil liberties, corrupt politics on its own, or corrode good governance, nor does sound money automatically produce justice. The employment of fiat currency creates incentives that, over time, encourage these outcomes—a more subtle gradient that is difficult to perceive, harder to communicate to the general public, and challenging to organize around politically. This combination not only erodes (small d) democratic and (small r) republican institutions over time, but shortens the timeframe over which institutions, policymakers, and decisionmakers govern, legislate, and execute policy.

Time Horizons and Expediency

When financial realities are obscured and smoothed over temporarily, institutions adapt toward short-termism. Executive agencies and principles focus more on making political progress or pursuing short-term solutions they can claim they achieved or ‘won’ over an election cycle, or even just a news cycle. Emergency measures and tools are frequently invoked to achieve change, bypassing legislative action in Congress, which itself is incentivized to play politics rather than take meaningful action. Structural reform and long-term solutions are postponed—or even preserved as election issues. Courts become overwhelmed with challenges to broken norms, laws, and precedents and often too slow to respond to ongoing actions given the necessary and deliberative nature of jurisprudence.

Just as with the power of the purse, expansion of coercive law enforcement tools ratchet in the same direction, and are far easier to expand than to roll back. Splashing recent headlines, the Immigration and Customs Enforcement (ICE) agency has taken actions and issued controversial policy memos that violation of the Fourth Amendment, arguing it does not need judicial warrants to conduct searches and seizures based on ‘reasonable suspicion,’ which the agency itself seeks to define.

None of this is new in the United States—many are quick to forget that the same civil rights violations ICE today stands accused of took place during the Obama administration and a bipartisan commission detailed the erosion of protections of civil rights in 2004 during the Bush administration.

What most civil rights challenges seem to share in common is a challenge to some other state goal, whether political or policy-oriented. Anti-terror. Pro-inclusiveness. Support for state immigration authority. Respecting civil rights impedes the state’s ability to act expediently to achieve its ends by design—and therein lies the premise. Expedience. Time horizons. Short-termism. Locally rational decision-makers choose the best course of action to achieve their ends in the shortest timespan for the greatest benefit. Because of incentive structures, that time horizon is almost always short-term time horizon for immediate political gains. The long term, high-yield structural solutions are often ignored because they are deemed less likely to succeed, less beneficial, and more risky to attempt than playing politics for re-election.

Credibility, Trust, and Restraint

In a democratic republic, sound money is to fiscal power what due process is to police power: a restraint that forces coercive action to be more explicitly legible, authorized, and accountable rather than purely discretionary and cost-obscured. When economic reality can be papered over with for an election cycle, it will be—it’s always good for the polls to be good on criminal justice and cut taxes at the same time just before the election when memories are fresh.

While many may find villains and heroes in this process, this system does not require good or ill will to function the way it does; the incentives and the odds are stacked against responsible behavior and the public interest in design. Nor does there need to be good or ill will in design for this system to be engineered; human error is a sufficient condition to produce the legislative, civic, social, and economic malaise in which we find ourselves. What matters is that, structurally, the abandonment of sound money contributes to short-termism and expediency in governance, and its restoration can help reverse that trend.

The cost to retaining a fiat system is much greater than enabling any one civil rights violation; over time, citizens perceive their government to pursue its own aims—regardless of stated intentions or political affiliation of any given administration or Congress—without consideration for the impact on its citizenry. Short-term solutions rarely yield long-term benefits, and thus problems persist. Governments lose trust and credibility.

Dozens of surveys conducted in just the last year found that Americans overwhelmingly support legal immigration and the provision of a secure border. While challenges in governing immigration in the 21st century are perhaps more difficult than in previous eras, it is well within policymakers’ and technical experts’ ability to achieve a balance between these two perspectives by clarifying the law and and educating the public.

This is extremely unlikely to happen given the polarized, and therefore politically useful, nature of the debate, which can be leveraged as a major campaign issue in succeeding election cycles—a process variably called issue exploitation, perpetual campaigning, problem maintenance, or strategic nonresolution. Instead of resolving an issue, a politician or party ‘maintains’ the problem with temporary fixes in order to continue to campaign on that issue. Instead of a policy question, an issue becomes a political battle reenactment where the performance of fighting is more important than coordinating to accomplish meaningful change.

Over time, not only are credibility and trust in the institutions lost, but legitimacy as well. Institutions in a democratic republic that repeatedly and deliberately fail to fulfill the tasks entrusted to them by the public are in open violation of public trust. This doesn’t mean that the institutions themselves are inherently ineffective or must be replaced. To abandon democratic and republican institutions because our exercise of them is faulty is to cut off our nose to spite our face. Neither the idea of democracy nor the concept of a republic is what’s failing—the implementation of democracy and structure of the republic is. That calls for a repair job and renewal, not a chainsaw.

The restraint that sound money places on governance is a cornerstone of credibility and trust, the impact of which ripples out to incentivize accountability, legibility, and transparency. The United States desperately needs it back. How can you expect a polity to tell the truth about its governance if it cannot tell the truth about its finances? How can you ask someone to trust a process that inherently obscures reality and incentivizes disfunction?

Sound Law Enforcement

Perhaps the greatest rebuttal to the argument for sound money as a restraint on the state is the idea that limiting the government’s resources would cause underfunding for law enforcement (or any other core issue or task of governance). Less money is equated with worse outcomes or some form of austerity in this viewpoint. By this logic, tying the value of money to a fixed asset held in reserve ties government’s hands in a crisis or would prevent it from taking otherwise necessary actions. A government incapable of governing, defending, and keeping law and order is even less legitimate than a government that overcorrects.

However, this idea assumes that effective government must either be granted money and resources at minimum in excess of what it actually accrues from taxes and other revenues in order to govern effectively. Any government that must rob from its future or lie about the cost of governance to its citizenry, knowingly and intentionally, lacks legitimacy and competence. A sound money monetary and fiscal regime does not mean a lack of funding for law enforcement or any other activity; it just means that costs must be honest and clear. Sound money requires government to ground its expenditures in its actual total income—and therefore more legible, accountable, and transparent about its choices with its citizenry.

Moreover, when government can no longer borrow against the future of its citizens and defer the cost to inflation and future debt payments, it must better prioritize the use of its resources to achieve its legal requirements—or else be subject to legal oversight. With restrained spending and greater scrutiny, incentives for behavior shift towards sustainability and stewardship.

Sound money is not a cure-all for political gamesmanship, government overreach, or protection of civil rights. But it is a necessary step on the arc back towards a more just democracy and republic. When money tells the truth, everything else has to at some point.

How do we do it? There are a lot of ideas. Getting there from our current level of debt—more than the U.S. could possibly pay back immediately—is no easy task. Gold bugs (so-called for their affinity for the shiny stuff) advocate for a return to a gold standard. The ‘hodlers’ (not explaining that one here) in the Bitcoin community advocate the digital currency as the ultimate sound money. Others suggest a mixed basket of sound assets to back a sound money currency. The hard part is not finding candidate systems, but in designing a transition that preserves stability while restoring constraint.

What do you think?

[Edited on February 5, 2026.]
A previous version of this article implied a direct causal chain from fiat currency to short-termism and civil rights violations. This is inaccurate. The article has been updated to reflect the argument that fiat currency creates incentive gradients and enabling conditions that encourage short-termism, leading to a higher potential for civil rights violations. Footnotes and clarifying language were added throughout to improve general clarity and identify useful argumentative simplifications.

Image generated by Cameron Vaské using ChatGPT v5.2, February 4, 2026.

Imagine I gave you and ten of your friends a shared credit card with no expiration date, no credit limit, and the only condition was that you promise to keep paying me back—an ‘infinite money hack’ for life. You’ll hold the card, and the only thing I demand is your word (and evidence) that you’ll keep paying it back. Sounds like a pretty sweet deal, right? Well, maybe not.

For the first couple of years, you might be smart with it—you decide you should all vote on what you spend on and maybe use it here or there to afford a few big things you couldn’t pay for in cash up-front, and then the group pays it back in a few months. But there’s always the temptation to spend more on it than you can pay back quickly. Eventually, someone in the group wants a big new house they couldn’t otherwise afford, and someone else decides to buy a whole new wardrobe, and a third person wants to buy a new car with it. And you can all technically afford to finance it, and the group agrees to spend more and you all end up making the purchases. You buy the house, the new wardrobe, and the new car with the credit card—still more than you could all afford otherwise, and you all go deeper into debt, but you’re able to finance it. Maybe you all agree to put in a little more work to make some more money to help pay it down faster.

But then there’s a recession and four of you are unemployed, and they’re struggling to buy necessities. But hey, not a problem, right? You can put the groceries and the mortgage and everything else on the card while they’re unemployed and ask them to pay their portion of the interest on the debt from your savings. (And now you’re super popular with your friends.) Phew!

Except that you all never fully pay the debt off, even after you’re all gainfully employed again. And slowly it just gets normal to keep spending more than you can pay back. The interest doesn’t kick in too high and it’s easy to convince yourselves you don’t need to pay it back right away or live within your means. But it catches up with you, eventually. Now you’re spending almost as much on debt payments as you are on groceries or your mortgage.

That’s what’s happened to spending in the United States—and in most other countries. The U.S. dollar is what is called fiat currency. Fiat literally means, “an authoritative or arbitrary order.” In plain language? “Because I say so.”

Lock in. This one’s a doozy.

‘Because I say So’

Okay, but, it’s the government. So, it shouldn’t be a problem, right? Unfortunately, it’s actually a huge problem.

Remember our infinite credit card? Yeah. See, instead of a credit card, the government has the U.S. Mint, the U.S. Central Bank, and the U.S. Federal Reserve (or “the Fed”). Instead of ‘put it on my card’ when we buy more than we can afford, we issue debt (in many forms). When there’s a recession? Instead of spending less, we spend more to ‘stimulate’ the economy out of it—just like you saving your friends by covering the costs with the credit card. Instead of spending from our savings, we often issue more debt and simply print more money.

Might sound fine. But see the thing is, if there are more dollars out there, each individual dollar is worth less than it was before. And that means inflation. When the government spends money to stimulate the economy, it might cut taxes to get everyday people to spend more or it might give a big stimulus package to a bunch of firms to spend the money and get industry going again, or both. But that demand isn’t real, it’s invented. And when we expand the money supply (issue more debt and print more money), the money everyone had left to start with is worth less.

So what does that mean for you and me? Well, it means that when there’s a recession, the government has some tools to fix it in the short-term. But that also means your money is going to be less valuable afterwards, and when it’s worth less, prices go up. And now you have less actual value than you had before and prices keep rising.

It also means the government—on behalf of all of the taxpayers—owes a lot of money that it’s going to pay in interest. Where’s that coming from? Future taxes.

And you might think, ‘Well, Congress wouldn’t let us get too indebted. It’ll be fine.’ Except that every member of Congress wants to get re-elected. So they make promises. ‘Taxes will go down and we’re expanding benefits!’ YES. Except… We’re all going to pay for that in inflation and in future taxes.

Kind of like you (with your infinite credit card) telling your friends you’ll all get to eat out all week and go on three vacations, and to make sure you have more time for them, you’re cutting back on hours at work. More spending and less income = more debt = more interest payments later. It has to be paid back eventually.

If this is all sounding like credit card spiraling to you, that’s basically it, except we did it to ourselves.

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Stealth Tax & Broken Promises

So, here’s the thing. Your friends and you wanted the extra meals out and the extra nice house and the new car and the new wardrobe. In case it hasn’t landed yet—you’re the government in this analogy, and the group of all of your friends are all of us in our democracy. Except friends don’t vote for you to keep charge of the credit card or pay you taxes, and in our democracy, we do elect the government and pay taxes to it. So, of course we keep asking for more stuff and to pay less for it. But that creates really bad incentives.

Politicians have to keep promising more spending and fewer taxes and a better economy—just to get re-elected. Even though it’s all coming back for us in inflation and future taxes. In that way, inflation is like a ‘stealth tax’ on all of us. We’re paying for it by not being able to afford as much of everything else. And ultimately, it means that politicians can’t keep their promises to everyone, because the economy isn’t going to keep getting better when we spend like this.

What’s worse is that because we issue lots of debt and print lots of money, there’s lots of cheap credit for everyone else—the housing market, the healthcare system, the banks, the tuition for university, the everything. So everything else gets even more expensive because they have first access to the credit and have most of the assets. When you’re an institution or incredibly wealthy in the debt-backed fiat system, you can also just borrow a lot and pay it back later. And when the recession hits, you buy up all the stuff that really holds value—especially assets—for cheap.

The boom-bust cycle, inflation, and cheap credit combined are one of the most significant drivers of income inequality.

Charting A Spiral

So, where are we at with that today? Well… numbers and graphs time. As of fiscal year 2025, the United States is paying around $970 billion (with a b) in cumulative interest payments on our national federal government debt, which is now a whopping $38 trillion (with a t). It’s hard to imagine what that even looks like.

Luckily, I’m halfway decent with a spreadsheet and Photoshop. Have a look at the fancy charts below (I’m really quite proud of them).

We actually have so much debt as of 2025 that that interest payments are now the fourth most expensive thing in the federal budget—even more than we spend on national defense, competitive with how much we spend on healthcare, Medicare, and social security. That’s like you paying so much just in interest on your infinite credit card debt it’s starting to compete with your budget for groceries.

So, yeah. That’s not great. ‘But we make lots of money, right, so we couldn’t we just spend it down easily?’ Well… sorta. This is debt owned by all of us through our government—which gets most of its money from all of us in taxes. The problem is we’re still spending more than we make every year. Below is all our federal government revenue and all our federal government spending, from defense to social security to Medicare—to interest payments.

So, that’s us spending more than we can really afford on our infinite credit card. All those years where spending was higher than revenue are years where we had a deficit. That happy little spot where we made more than we spent was a surplus. For you with your infinite card, it’s basically—did you accrue more debt by spending or were did you have some left over? See the graph below for that.

So okay. Lots of graphs of the problem. But how is this actually happening?

You may have noticed I started all of those graphs in 1971. Remember how we said earlier we ‘fully turned on’ our debt-backed fiat system in 1971? The history and economics nerds call it the ‘Nixon shock,’ because it was during Richard Nixon’s presidency that the United States unilaterally cancelled the direct international convertibility of the U.S. dollar to gold.

Plain language: We officially started saying the dollar has value ‘because we say so—trust us,’ in 1971. And our handy dandy charts pretty clearly show what’s happened since then to the deficit.

To be fair, a lot of other things have taken place in that time and contributed to this issue, either negatively or positively. Globalization, automation, demographics, free trade, energy shocks, the rise of the internet, and so much more. So, to be clear and honest, what we’ve done here is drawn correlation and described a major part of the causation, but not the only part.

But still, how is this issue impacting all of us?

Drowning in Dollars

Inflation since 1971 has risen a whopping 699.94%. Purchasing power (basically, what you can buy for a dollar) in 1971 is about eight times as much as in 2025. That means if it cost you $50 for a really nice ‘Sunday outfit’ (a suit or dress or whatever) in 1971, it would cost you around $400 today. It can be difficult to measure inflation, and you can measure it in a lot of different ways. Below is a chart using the ‘core Consumer Price Index,’ to calculate inflation since 1967 (which maps closer to our eight-times-as-expensive figure).

This is the main reason we’re all paying more for everything, year after year; how stuff keeps getting more expensive.

You might be thinking that’s weird since our GDP keeps going up—we keep making more money. That’s true, but that’s everything we make in the United States in aggregate. Not how much we all get paid or individually make. If you and your nine friends each made $50,000 a year, you’d all make $500,000. If one of those friends then got a great new job and started making $100,000 per hear, you’d now all be making $550,000 a year, but that doesn’t mean that each of you got $5,000 richer per year.

Here’s real (adjusted for inflation) GDP growth since 1971.

You might still be thinking that wages have grown as inflation and GDP goes up—but it’s not that simple. And here is a graph of how productive the average U.S. worker is and how much they get paid. Notice the shift from 1971 onwards.

So, yes, wages did go up, but nowhere near as much as the productivity rate, and certainly not as much as inflation. So what gives, man? Why is everyone making less than they used to?

Without painting a wall of words for detail in this article and to simplify it a bit, when credit is created and money printed, someone has access to it first, and that someone isn’t usually the average person. (An economist named Richard Cantillon pointed this out, so we call it ‘the Cantillon Effect.’)

This means that wages lag behind inflation; they all grow slower. This also means that investors and private equity firms can purchase shares of a stock (or assets) at pre-inflation prices to then sell the same shares or assets at inflated prices. If they hold the assets, as inflation eats away at the value of the dollars they originally bought it with, they actually gain lots more just by holding onto the asset.

Before the debt-backed fiat system, the more productive American workers were, the more they made. Afterwards… well, they still made more for being more productive, but way less than they used to.

Basically, if you got paid $10.00 per hour to make 10 of something every hour you worked this year, then next year you got better at it and made 15 somethings every hour, you should be making closer to $15.00 per hour, but instead you make more like $12.50. That’s the gap we started consistently seeing between wages and productivity.

Doesn’t matter if you work longer or faster, you’re making less than you should. Combine that with everything getting more expensive from inflation, and all of a sudden you get a hustle economy—everyone working harder, longer, and faster just to keep up. Welcome to 2025.

What This All Means

The infinite money hack actually ‘hacks us back.’ We can spend more—but we pay an insane amount for it later in extra taxes to pay interest, lost wages, inflation… and we made it harder for Congress to be responsible with the piggy bank on top of that. I didn’t mention the really scary part though.

Remember how I gave you that credit card? I’m starting to wonder if you’re ever going to pay me back. So I’m going to increase the interest rates—which makes it harder for you borrow more and to pay it all back. That cycle is likely to continue until I gain some more confidence. It gets more complicated, too. In our global economy, people buy U.S. debt to get dollars. Some of our debt is actually owned by other countries, and we buy other countries’ debt too.

So not only do you and your friends have an infinite credit card, you have other friend groups with infinite credit cards who owe you money—and to whom you owe money. So what happens if one of them is suddenly unable to keep paying for it? Well, everyone suddenly can’t pay anyone back. That’s basically1 what happened in 2007-2008, and why people liken the issue to dominos. How do we fix it—to keep the system from collapsing? Well, the Fed will print more money. Inflation goes up. And here we are again.

It keeps happening and it will likely keep happening until we can get off of the infinite credit card (or legally force ourselves to use it responsibly).

What If We Don’t Stop?

Most economists agree the United States is not on the brink of default, but the long-term trajectory warrants thoughtful planning. If we don’t stop, eventually there’ll be a time when we can’t just pay it off with printing, a promise, and a wink, because everything else will be worth so much less and we’ll owe so much more in interest, we couldn’t possibly pay it back. Which means nobody would be able to stop the ‘dominos’ from falling. The United States could default on its debt, which could trigger severe global financial stress and unpredictable cascading effects.

Without staring into a crystal ball and divining what that would look like, the consequences of that happening would be dire and risk not just another financial crisis, but potentially a structural global financial collapse.

We have time to fix it before it ever gets there, but we do need to start. Preferably yesterday.

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Tacking Into the Wind

So, how do we get out of this mess? We can’t just turn off fiat currency. That would be like you trying to just handing in the infinite credit card—with several trillion dollars in debt still on it and bills to pay next month. You’d go default and be bankrupt instantly, which is what we’re trying to avoid.

Let’s also be really clear here; there’s a lot more going on in the economy than just the picture painted here, and there are plenty of other issues. Nonetheless, this is clearly a big one we need to deal with.

But we—as a people and a government—can do a few things:

• Balance the budget. I know. Easy to say, hard to do. But if we balance the budget, we can stop the car before we come too close to going over a cliff.

• Plan and communicate. It’s no good if fixing the issue takes place in a vacuum. The monetary and financial worlds depend on predictability. Whatever we choose to do, it needs to be well planned and transparently communicated.

• Change the Trust dynamic. All money is based on trust. Right now, it’s based on the ‘full faith and credit’ of the U.S. government. That ‘Trust that we’ll pay because we say so, we don’t fail, and we’re credible’ model is coming under strain. We either need to fix the structure of that model and restore long-term faith and credibility or shift to a trust and verify model—more like, ‘Trust me because I can’t lie and you can check the receipts.’

So, how do we do that? Well, I’m sorry, but you and I aren’t blowing the lid off of anything that hasn’t already been said with this article (though, hopefully, it’s been more accessible than the technical financial talk). This conversation has been happening on and off for at least the better part of a century, or, technically, since the founding of the Republic. And right now, the switch for this conversation is fully on.

Some argue that we can’t fully get off of fiat currency, but we can put guardrails on it—turn it into a fiat version of sound money. Others argue that fiat currencies can’t work and that sound money isn’t only needed, but inevitable. Many argue lots of views in between. But, this is an issue, and the government has confirmed as much many times. As recently as February 2025, the Government Accountability Office (GAO) reaffirmed the precarity of the issue in its annual report on fiscal health to the Congress and advocated “

I’m not sure what ‘the answer’ is. But it to me that we need some version of sound money (or something very like it) to fix the incentive structures here. And here’s the thing; before 1971, and especially before 1913 (when the Federal Reserve was established), we did that. We had sound money. Most countries did, and they did so for many hundreds of year prior, too. So it’s not brand new as a concept, but whatever solution we strike upon, it absolutely would need to be updated to work in our 21st century world.

Where does that leave us? With more questions. Is this assessment correct? What do we do about it? How could we do that? What does that mean for our future?

Let’s explore those together.

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So much of what we seek to accomplish comes down to how we make decisions—and why. We try to design institutions and processes—in the economy, in our society, in our politics, and in our government—that reward ‘good’ behavior. We want to want to do the right things. When the incentive structure breaks down, though, we get outcomes nobody intended.

Why did you buy the generic brand cereal? It probably wasn’t because you want to see the decline of small brands or local foods, or mega-corporations in charge of your morning meals, or just like the idea of monopolies. Probably, it’s the opposite—you want small brands, local foods, small businesses, and competition. You probably bought it was more or less what you wanted and because it was cheaper—or the only thing available to you—and you have little money to prioritize those other things.

But if most people just buy the generic brand cereal—because its cheaper—then we lose competition, diversity of options, and local producers lose out and we get fewer small businesses. Somehow we got outcomes nobody wants, even though we prioritized cheaper prices—something we do want. And with less competition, there’s more potential for those brands or stores to price-gouge the consumer base. Sure, people don’t just buy based on price—they buy on taste, appearance, brand recognition, and so many other factors—but price is still the trump card for people on a budget. So, what’s going on here?

Okay, maybe cereal isn’t what’s got our collective pants in bunches these days. Let’s get real. Housing. Healthcare. Wages. Representation. Infrastructure. Alright, alright.

We all want affordable housing. I think that’s probably a safe bet that few people would argue with. People want to sell houses and people want to buy houses, and huzzah, a market is born. So, why does housing keep getting more expensive if it’s something we all want to provide and receive?

We all want representation in government, too. In our Republic, we decided we can’t all be experts on rare earth minerals and urban development and agriculture and foreign policy and all the other issues we deal with collectively in government—so we send representatives to, well, represent us and do that work. So, why do we sometimes feel they don’t represent us well or govern as effectively?

It’s pretty much the same for everything else we mentioned. It’s not just about people—it’s about incentives. Even the most well-intentioned among us has to contend with how a system works, and incentives form a core part of the decision-making process that shapes what choices are available to us and how we meet them.

If you woke up tomorrow and decided to go fix these things by running for office or getting into housing, healthcare, infrastructure, or fair compensation advocacy, you’d run into the same obstacles that everyone else is dealing with. But what are those? To make this simple-ish, we’ll stick with just one thing for now: Elections.

Gaming Ourselves

So, you’re gonna run for office? Great! Go fix this stuff. But first, you’ve got to get elected, right? It’s not as simple as just going door-to-door and telling people about your idea for how to fix ‘it’ and getting them to vote for you. You couldn’t possibly meet everyone in your district. So you need a staff. You need campaign posters, you need to book events, you need to get in the public eye so people can hear your great idea, —and decide to vote for you. So the first thing you need is money. Problem #1: Get funded.

Some candidates have charisma enough to get people to open up their wallets voluntarily. (Some of the kids call it rizz. I know. Keep going.) But most of the time, even if you get five bucks from a lot of people, you’re gonna need to raise more to keep advertising—your opponent surely will be, right? Where are you gonna get that money? Enter the lobbyists. People and corporations and interest groups will offer you money to help you get elected if you promise to protect their interests. That sounds really democratic, but it starts to dilute your platform a bit. What if you have to take money from big interests that want you to protect their interests more than represent your constituency?

But let’s say you sidestep that. You are a savvy political operator with a specific thing you want to fix. And you get the campaign money and get into the primary for your local party. Nice! Now you’ve got to win the primary to be one of the (probably) only two names on the ballot. Problem #2. But you know who comes out for primaries? No, seriously. Because primary voters are often the most vocal and party-loyal voters (and there’s some evidence to suggest they’re frequently the most ideologically driven voters). It’s harder to get people as excited about a moderate or compromise position—and more importantly, to get to the polls for it. So you’ve got to get that primary turnout up by playing to ‘the base.’

That’s not necessarily bad—they’re the most active, and we do want people to be politically engaged. But they’re also likely the more extreme parts of your party ideologically. And you just want to fix this one thing here—and want to fairly represent your community on the other issues. So here’s your first purity test—will you make extreme promises to this voter group first and stick with those promises, even if you disagree with them? Or do you basically lie and then pull the rug out from under them in the general election, or after you get elected? Starting to get a little shaky.

But let’s say your solution either meets the favor of the primary folks, or people really respect your honesty and political savvy and you don’t cave—or you do cave and compromise away your other views to just get this one thing done. Your pet issue. Mmh. Uncomfortable, but you figure, ‘if that’s what it takes.’

So, you win your primary, somehow, and now you’re in the general election. Problem #3. Your opponent just went through their own version of these challenges, and now they’re starting to look kind of scary to you and your base—because they just promised kind of the opposite of what you just promised your base, and convinced their primary voters to vote against you and what your primary voters wanted for by scaring them about your agenda. And now it’s off to the mud-slinging race.

You troll and criticize them for their positions, and they troll and criticize you. They dig up as much dirt—real or imagined—on you as they can, and so you do the same. Let’s say you’re better at it than they are, and you win the election, even though a large portion of your district—people you wanted to represent—don’t feel you represent them at all. Also, everyone else in the ‘rational middle’ now looks at both of you like you’re nuts, and nobody’s thrilled with either of your positions. Turnout is low. Lots of people decide to stay home. So who’s going to show up? The people you can scare the most about your opponent and get the most hopeful about whatever it is you’re promising now. But you have your eye on the prize—fixing your issue. So you do it.

And let’s say you win! Congratulations! You’re in office! Finally, time to go fix that one thing, right?

Except now you have to convince your fellow legislators to enact the bill(s) to fix that thing. Except… they also got elected to fix different things, just like you, and compromised and promised away all kinds of other issues—including your issue—to their donors and primary voters. So, now you’re stuck, and it’s time to try to strike deals that let everyone work on all their issues and fixes without breaking promises, if you can. But that’s gonna take a lot of time—more than is in your term. So, you have to go get re-elected to keep that seat long enough to fix the problem. Which means more fundraising, more fearmongering, more ‘performing,’ and less time governing and trying to reach the compromise in the first place.

And soon now it’s been years and nothing has really gotten done. And every election you’ve had to make new promises—ones you probably couldn’t keep—and scare people about your opponents. And gosh darnit it’s messy. ‘What if I could just choose my own voters and have a safe seat to not worry about that and finally go fix it?’ you ask yourself. All of a sudden, gerrymandering is starting to look pretty attractive.

Did you mean to become a career politician? No. Are you in favor of gerrymandering and selling your vote to the highest bidder? No. Do you not care about those other issues? No. Did you want to gerrymander to give people less representation? No.

You just wanted to go do good and fix the thing. Your voters wanted you to go fix the thing and make fair compromises. And you wanted to represent them, and somehow ended up representing a bunch of donors and a small group of primary voters on 99% of issues, and probably breaking a whole bunch of promises you made along the way—not because you wanted to, but because you couldn’t possibly keep them.

It’s the incentive structure. Nobody designed this system meaning to force you—or your opponents—to take such wild positions. It just happened that way.

We set up a primary system so that the two parties would select their best candidates.

We let advocacy groups and companies and any other private entity support those candidates because we want the people to be able to support ideas that they believe in and that are good for them.

We set up a general election to be for the candidate that gets the most votes because we want the people to have the choice between the better of two candidates.

None of those are bad intentions, but we still got bad outcomes. Now, it’s not always this harsh, but these incentives and pressures are still there, regardless. The same kind of thing happens with the economy, housing, infrastructure—you name it. Arguably more-so, because we layer the broken incentive structures for those on top of the broken incentives for politics.

All of this is to say nothing of the debt. Remember how you need to get re-elected to fix your thing? Well, your new opponent is promising to lower taxes and increase spending—beyond what we can afford without taking on debt. So, you make similar promises to stay in office. And who pays? Future generations. Nothing you wanted to do at all. Everything you were incentivized to do. (Now imagine you didn’t have everyone’s best interests at heart to begin with. Yeesh.)

We made a game that plays us, instead of the other way around.

When even the people with the best intentions can’t do the good they mean to, how are we supposed to get the outcomes we wanted?

Design a better game by fixing the incentives—with real people front of mind—so the rules make sense.

Fixing How We Fix Things

By now you’re probably pretty bummed out and really wondering if democracy is the best way to do government. So, I have good news for you:

Not everything is broken

Yes, people and institutions suffer from backwards incentives. But if they were totally backwards, we wouldn’t be arguing about them, because they would have totally failed long ago. We really did build a good thing here. Congress still quietly does the work it needs to when it has sufficient political cover and institutions and processes we built continue to deliver and do the work. People—voters and electeds—both still make courageous and principled decisions. If anything, we should be more confident in our ability to right what’s wrong because of those things. Americans and our institutions are as amazing and resilient as we can seem confusing or fragile.

Everything is figure-out-able

We can totally fix what isn’t working—and improve on it. It just takes awareness and understanding. Democracy is the only system that really lets us all fix the rules in the first place, and our Republic is the fabric that binds it all together. We built in guardrails and tools to help us do just that.

So, what is it we all want? We all want freedom and the power to improve our lives. Basically, Life, Liberty, and the Pursuit of Happiness. So what does that mean in practice?

Here’s my take. Push back where you feel it doesn’t meet reality.

• We want an economy that rewards work. We want to earn money that holds its value and that we can invest in our individual and collective future—our happiness. People want to earn their way, but that value has to be stable.

• We want elections that reward honesty, integrity, and transparency, where we choose the best ideas and people to solve our problems (not the least-worst ideas and people). We don’t really want a crazed mudslinging election; we want inspiring people who make us feel seen and heard who will govern responsibly.

• We want a limited government that works efficiently, fairly represents everyone (both by region and by their ideas for solving problems), and safeguards our freedoms and interests. We don’t want to have to interact with government everywhere—just where we need it to be.

• We want a society that shares responsibility for our freedom and prosperity in which we can freely pursue our own interests—both individually and together. We want to be left to do our thing and pursue our own goals while still being a part of a community and contributing to our country.

I don’t think any of that is truly partisan. It sure is American.

By now you’re probably thinking, ‘Okay, wise guy. How do we do that?’ Yep. Easier to point out where the problems are. Harder to fix them. I don’t have all the answers, and we need to solve them together. But I do have a few ideas and thoughts for you to ponder that might get us going in that direction.

Free and Fair Elections

If we’re going to fix the merry-go-round I just put you on above, we need to fix how we pick the people we elect to go fix our problems. If you thought the example above was a bit of a mess—it is, and it gets messier.

It seems clear to me that we need election systems that:

• A) Let citizens (like, people) fairly support candidates they like;

• B) Make sure voters are picking candidates, not the other way around;

• C) Let voters meaningfully choose between candidates to make informed choices about a variety of solutions;

• D) Produce candidates that really represent us; and

• E) Enable meaningful competition without making politicians beholden to bad incentive structures.

There’s a lot of different ways to do those things. To model what we’re talking about—we have to be honest. There are always trade-offs to one or another electoral system. But we can absolutely pick a better path. As we explore those together in future articles and in the community, I’ll do my best to be call those out as I see them. Balls and strikes. If you’re reading this, I’m counting on you to help keep the conversation—and me—honest.

Stable Economy

If we want to reward work, we need to empower people to earn something that holds value. To me, that means the cash, dinero, dollars—whatever you want to call it—that we earn needs to have and hold its value. Twenty bucks today should be worth twenty bucks tomorrow, one year from now, and ideally, even twenty years from now. Rampant inflation is like a stealth tax on everybody’s paycheck, and it’s hard for companies to keep up with that in salaries, too—especially small businesses.

Once again, to me it seems like we need to have:

• A) Money that holds its value over time;

• B) Stable growth in the economy;

• C) Work opportunities that are productive and contribute to the economy;

• D) A business-friendly environment for healthy competition; and

• E) A safety valve so nobody is crushed because of crises and downturns they didn’t cause.

That’s a challenge. But it’s doable. And we’ll explore some ideas together on how we can manage that. Again—some of you know way more than I do. Please keep me honest so we can explore ideas for real solutions, together.

Honest Institutions

We need government to govern better. Not necessarily govern more but more effectively, efficiently, and transparently. It’s no good if we fix our politics—and our elections—and then give our elected officials a broken toolbox to fix the things we sent them there to fix for us. We still need them to serve as checks and balances to one another, too, and keep honest both to each other and to us.

So, you know how this goes. I’d suggest we need government that:

• A) Plans and governs for the long-term while taking care of immediate needs;

• B) Compromises well, listens effectively, and responds meaningfully to our needs and wants;

• C) Spends our tax money effectively and efficiently;

• D) Works at the level that the problem is at (local, state, federal, etc.) and supports non-governmental solutions when government isn’t the best answer; and

• E) Is honest, transparent, accountable, and auditable so we not only can see it working, but trust that it is working.

That’s not asking for a lot, but it is a lot to make sure we get. And we need to be clear-eyed about how to make that happen—and what can go wrong, unintentionally, in fixing it to do that.

Shared Responsibility

It’s no good if we fix all of this on paper and then nobody is incentivized to show up and make it happen. We need to all pull together, not because we’re forced to, but because we design a system where it’s in our own best interest to do that and we are free to do that. Because, ultimately, it is. We just need to make sure incentives make it easy for us to do the right thing as we see it.

You’re bored of lists. Here’s one anyway. It seems clear to me we need to have:

• A) People participate in elections, governance, and the economy for the ‘right reasons’ (and not to take advantage of broken systems for personal gain);

• B) Liberty to pursue our own interests, but don’t get a ‘free pass’ to do whatever we want (especially when it tramples on other’s freedoms);

• C) Meaningful ways solve our own problems the way we want to, freely, together; and

• D) ‘Skin in the game’ and the ability and desire to improve our common wealth and prosperity, both individually and together.

That one was shorter.

And now you’re like, “Okay, great, but uh, how do we do that?’ You’re right. And No one reform fixes everything, no one framework captures the whole problem. But incentives do drive the direction the gears spin in, and that’s a good place to start. If you asked that question, I think that’s exactly the right question to be asking. Let’s explore that question, together.

A few places to start thinking, and then some tag links for future articles in these broad categories to more on specific incentives and how we fix them—from the federal budget to housing to elections to climate policy and beyond—can be found below.

If we want more options in our elections, we need systems that offer more choices and avoid pitfalls in choosing those, both as candidates for the election and in the election itself. If we want our money to hold its value, it can’t simply be printed into existence on a whim, or we get inflation (and probably a large deficit). If we want our institutions to be honest and responsive, we need to redesign them with those needs in mind. If we want shared responsibility, we need all of those systems to reward engagement, not just demand it.

If we make it easy and good to let ourselves do the things we want to do, we’ll do them. If we fix the rules, we can keep our promises.

[Future tag links will live here; stay tuned.]

Jump to some links for tags on our work here as we explore more on incentives and ideas on how to fix how we fix things from The Commonwealth Perspective:

Honest Institutions
How can we make our rules, norms, and systems can be rebuilt so that they earn trust instead of demand it?

Sound Money
How can we can make our work, savings, investment, and production real again and keep value stable over time?

Shared Responsibility
What does it mean to have freedom paired with duty to each other, to our communities, and to the future?

Image created with modified photo by Cameron Vaské (all rights reserved) and modified free photo by Engin Akyurt: https://www.pexels.com/photo/close-up-of-cracked-glass-11499130/

Government, the economy, and society are all exercises in public trust—particularly in a democracy. And that trust has been fractured.

In America, there has long been an implicit, and sometimes explicit, promise that if you work hard, you can earn your way to a secure and better life. If you play by the rules, you can get ahead. If you save and invest responsibly, you can retire safely. If you vote, you will be justly represented.

And that has worked for plenty of people across generations, more or less. But for many Americans, especially in recent decades, those promises are fraying.

Many have worked hard and found their lives still precarious. Many played by the rules and are still falling behind. Many saved and invested responsibly, only to see their savings slowly lose value due to inflation as their investments evaporated during downturns as banks and companies received bail-outs. Many show up to vote and still don’t feel responsive representation.

Naturally, these Americans are left asking, “I did what I was supposed to do. Why isn’t it working?”

Without clear answers to that question, people naturally begin to doubt those promises and the government itself. That trust deficit has stretched the American spirit thin in many parts of the United States. Because it doesn’t end with doubt.

That doubt becomes confusion. Confusion sparks frustration. Frustration turns into illusion. Illusions are shattered and become rebellious resignation. Resignation cools into despondency. Despondency wears off into cynicism. Cynicism fuels anger. Anger boils into outrage. And finally, outrage hardens into contempt.

We’re watching this process unspool constantly. It’s in the memes. It’s in the music. It’s in the protests. It’s in the reels. It’s in the cartoons. It’s in the comments. It’s in the bar talk. It’s in the conventions and rallies and talk shows. People are out there trying to make sense of where we went wrong and how to fix it.

The Blame Game

People are losing faith in the American project and in each other as it fails to deliver for them. But it’s not an immediate fall; people turn to each other and look for ways out. They turn to their politicians and to each other. When things fail, they turn to other politicians and communities. And yet, it still feels like nothing and no one is fixing it. And in seeking answers to that question after turning to so many other people, they start to look for something or someone to blame, and they start looking to less and less reasonable means to fix it.

That’s not stupid—that’s desperation. Couple that experience with other people telling them it’s their own fault, the more it fuels the frustration, the anger, and the outrage. It’s no wonder populism is on the rise. Populism promises simple answers to complex questions. “It’s Wall Street.” “It’s the banks.” “It’s the other party.” “It’s the billionaires.” “It’s the deep state.” “It’s the free trade.” “It’s the corporations.”

People feel that someone must be cheating them, because they’ve done everything they feel they can reasonably do and are still left with one big, glaringly obvious outcome: They’re just not getting ahead and it feels like nothing is getting fixed.

In our democracy, when people feel that way and keep seeing nothing getting fixed—or things getting worse—government starts to seem like a liability. Institutions operate, but don’t seem to care. They function, but don’t seem to serve. They respond, but don’t seem to listen.

No amount of kind words, good manners, generosity of spirit, or stimulus packaging can fix that. People have lost trust. They need answers to that question and they need a path forward and they need results. And they won’t wait forever for them, either.

Why Trust Was Lost

It’s may be obvious in context, but it needs to be said: Trust collapsed because the systems we built can no longer keep the promises they were designed around, and everyone can feel the gap between what’s said and what’s real.

It would be much easier if there was just one thing or one person or one group to blame for America’s woes. You can easily gut one institution that’s not working right or jail one person or sanction one group. But it’s not any one person or institution or group. It’s not who, it’s why.

Incentives drive why institutions, people, and groups do what they do. Not always, not perfectly, but often enough. It’s why people get up and go to a job they don’t like—to make money enough to live. They drive why institutions issue credit or don’t. They inform politicians’ choices about supporting legislation or not. They encourage groups to organize for collective action—or not.

The answer to “I did what I was supposed to do. Why isn’t it working?” is hidden here. It’s in complicated, well-intentioned designs for how government, politics, society, and the economy were supposed to work that aren’t.

The bad news is—those are hard to understand and profoundly less attractive than “It’s the banks,” or “It’s the deep state,” or “It’s the billionaires.” Because it’s simultaneously all of them—and none of them. It’s not who, it’s why.

The good news is—we can fix those together without cheating anyone and restore trust in our government, our economy, ourselves, and most importantly, each other.

Rebuilding Trust

You don’t just flip a switch and rebuild trust. It doesn’t work like that. There’s no one thing you can say or do to make it come back. To paraphrase the great Sean Bean as Boromir: “One doesn’t simply fix trust and make it all better.” It takes time and effort and honesty.

Setting aside all the flotsam of daily politics, disappointments, and actual dishonesty that causes Americans to lose trust regardless of systems, the core issues are:

• Work isn’t rewarding and doesn’t provide security for the future.

• Politics feels performative and elections seem to change very little.

• Institutions seem ineffective and morally hollow.

• Society feels ever-more fragmented and combative.

If you don't feel you get value for your work and saving, you don’t trust you can build a future for yourself. If politics and elections seem meaningless, you don’t trust you can change your future for the better. If institutions feel ineffective and morally hollow, you don’t trust their competency or that they have your best interests in mind. If society feels ever-more fragmented and combative, you don’t trust others will have your back. People don’t trust ‘the system’ because they no longer feel it’s for them.

When we keep chasing answers that promise to fix those things and don’t, we grow ever more desperate and lose trust in our ability to fix anything.

So how do we flip that script?

We have to be honest, for a start, and recognize each other’s humanity. We all want what’s best for this country and ourselves.

Next, we have to recognize and be honest about where we’re at. Our economy is not okay. Our democracy is not okay. Our republic is not okay. Our society is not okay. Pretending otherwise for the sake of calm is like hiding from the storm.

Then, we have to look dispassionately at why things are working the way they are and why they’re not working for us. Giving simple answers here is like just shouting at the bus driver when the bus keeps breaking down—it’s not going to get us where we want to go any faster.

Once we’ve understood the mess we’re in, it’s about how. How we can fix what’s not working for us so that it delivers on the promises we all feel we owe to ourselves and each other.

It ain’t sexy. And it ain’t simple. But it can bring understanding. And here’s the thing:

That understanding becomes enlightenment. Enlightenment sparks possibility. Possibility evolves into hope. Hope can restore faith. Faith encourages energy. Energy becomes movement. Movement becomes meaningful action. Action can deliver results. Results can inspire confidence. And finally, confidence restores trust.

There are no quick fixes. There’s commitment and curiosity. That’s how we rebuild trust in America one step at a time. Rome wasn’t built in a day, and it didn’t just fall apart, either.

They say the best time to plant a tree is 20 years ago; the second best time is today. Trust, just like a tree, takes time to grow. We don’t have a lot of time, but we do have enough, and we can start to rebuild our trust today with understanding.

If we fix the incentives, we can fix our institutions, our economy, our politics, and our society.

Put more simply, if we fix the rules, we can keep our promises again. And that is an American story.

Banner created by Cameron Vaské using free photos by:

Blue Arauz: https://www.pexels.com/photo/friction-on-a-wall-10682524/

Karola G: https://www.pexels.com/photo/image-of-old-building-on-american-banknote-4386157/

Everyone is trying to fix something right now. It feels to many of us like we have a million problems, and we just got another one. The polarization. The cost of living. The healthcare mess. The housing crisis. The sense that work doesn’t go as far as it used to. The feeling that our politics don’t really represent us anymore.

And it isn’t for lack of effort, or passion, or ideas. We as Americans have proven we have the passion and the caring and the heart. We volunteer, we work hard, we get involved. But if we’re being honest, most of it feels like pushing a boulder uphill. We fix one thing only to see three others break. We pass reforms that seem promising, and yet the underlying frustrations remain.

It’s not like we’re not zeroed in on some big challenges in our society or trying hard to overcome them. We’re working hard to fix so many things:

• Polarization and mistrust

• The cost of housing, healthcare, and education

• Stagnant wages and economic insecurity

• Crime, safety, and fairness in law enforcement

• Border and immigration challenges

• Political representation and performance

Yet it still feels like no matter who’s driving the bus, we’re mostly spinning our wheels and the bus keeps breaking down every mile or two. It’s not long before we’re all arguing about who’s driving, whether we made a wrong turn earlier, whether we should try changing the tires, or refilling the tank, or rearranging seats on the bus. What about the exhaust? Maybe we should all just get out and push? Or maybe its because more people got on the bus? And now we’re arguing about arguing, and more people are shouting at each other while others are asking everyone to calm down. And still, every few hours, we pick new people to give directions and drive the bus.

But it seems like almost no one is asking: ‘Where is the map?’ ‘Does anyone know where we’re going?’ ‘What about the engine?’

Why We Keep Breaking Down

When we think about our problems, we often talk about people, leaders, ideas, systems, and facts—who’s on the bus, who’s driving, what to do, how it’s working, and what’s happening. We rarely talk about incentives—where we’re inclined to go based on the rules and directions we already have, and how we’re inclined to make those decisions.

If we want to change the tires, we still have to agree on that, get the bus to a tire shop, pick out new tires, pay for them, and change them. The same thing is true if we want to get anywhere else to fix or change just about anything else about our bus. We can still achieve that and get to those places with our bus in its current state, but it’s way harder, takes way longer, and we keep changing routes based on who’s driving and who’s giving new directions. Often we decide to do something different before we’ve even gotten to the shop.

So here’s what I see is mixed up about our map, our ‘permanent’ directions, the engine, and how we pick who’s giving directions and who’s driving. We’ll park the bus metaphor for a moment.

Money, money, money

Money (I’m talking dollars) doesn’t reliably hold value long-term. People can’t ensure themselves a safe future very easily. Inflation chips away at wages and savings and prices grow ever higher. Businesses, investment firms, and banks chase growth to make up for the loss from inflation—driving risky decision-making and inevitably, bubbles that pop.

When people feel their future is so uncertain, they get panicked, angry, and desperate—and that’s only natural. People either don’t take any risks, take risks they probably shouldn’t and wouldn’t otherwise, gamble, and work extra jobs to make up the difference. It’s the hustle economy for a reason; we’re all going faster and longer and harder just to keep up, but most of us are still slowly falling behind. Like running on a huge treadmill that won’t stop speeding up.

Fixing the House

Elections reward vibes, outrage, and fear more than they do honesty, compromise, and courage. Polarization and performance pay more in winning an election than unifying and governing well. Kind of like two people auditioning to take care of your house. When it’s all about attention—especially when it’s only two people playing the game—people start slinging mud. ‘You don’t want the person all covered in mud to clean your house, do you?’ Problem is, by the end, everyone’s covered in mud, nobody looks great, and we’re not sure who it is we really want to clean the house anymore.

Not only that, but when we finally pick someone and they get to the house, there isn’t a clear answer on to how to clean it—because the house is already a mess, there’s water leakage, the electricity keeps coming on and off, and the foundation is starting to crack a bit. Some stuff gets cleaned and straightened, other bits get dirtier. If we’re lucky and we picked a really good housekeeper, more gets cleaned than gets dirty. Some contractors come by for maintenance, but they’re mostly there to fix the windows because they’re a bit smudgy. We got a new patio and TV and furniture and a new first aid kit. But the roof is still leaking, the plumbing is still clogged, the utility bill is still high, and the basement is starting to flood. Oh, and it just started to rain.

Not for nothing—but then, none of the architects sitting at the table when they drew up the blueprint meant for us to have a leaky roof, clogged plumbing, spotty electricity, or flooded basements. They were all unintended consequences of how we built the house. And to be fair—the house has been pretty decent for about two-hundred-and-some-odd years. It’s not that we don’t need to clean the house or new furniture or better WiFi or first-aid kits. But it really is time we renovated the house, re-roofed, and fixed the foundation.

Did You Hear?

Media rewards attention, speed, and virality more than it does focus, accuracy, or importance. There’s are stark differences between what we want to hear, what we think we want to hear, what we need to hear, what we think we need to hear, and what we actually hear. There always will be, too—but then, the divide between what each other hears and wants to hear and what we need to hear has grown so much, we are now driven by sharing fear and argument more than we are by possibility and resolve.

Ever more frequently, we’re not even hearing the same things anymore—and that makes it very difficult to have conversations. It’s sort of like a group of people trying to decide what to eat for dinner but everyone is communicating by playing ‘telephone’ and charades while someone shouts in your ear about carb-loading and protein diets. One person got, ‘Dave said the burger place and everyone who likes it sucks,’ while someone else heard, ‘I don’t think burgers are what we need right now.’

And so everyone gets hangry.

Running Wild

Markets are driven by short-termism. It’s all about the next year, the next quarter, the next month. A good part of this is due to the money problem from earlier—‘We gotta move faster if we’re going to beat the competition and stay ahead.’ But ahead of what? And what happens when you win the next leg of that race? If you’re running an ultra-marathon, it doesn’t much matter if you speed ahead of everyone else if you’re gassed out and collapse at mile three.

When the government, banks, and credit agencies print, loan, and spend lots of money, it’s like giving all the exhausted runners a sugar packet, a shot of vodka, and telling them all to run faster, when what they all need is to have a granola bar, rehydrate, and keep a steady pace. Eventually you get ‘zombies’ moving by inertia, collapsed runners, and those that dropped out of the race entirely. Only a few smart runners who avoided the sugar-crazed running strategy. And that’s when the government decides to bankroll some golf carts to carry some of the biggest-name running teams—the ones who cannot fail—until they recover because the race must go on.

Only, the race doesn’t have a finish line and we’re all running it, and more and more of us keep falling behind the pack.

What’s Really Broken

All these analogies and metaphors might be helpful, but at the risk of mixing them all up—it’s not just that our stuff is broken. It’s that our tools for fixing things are themselves breaking and we keep patching things with duct tape. We keep trying to fix things with our broken tools or stop-gaps, and we stopped believing we could fix things with our other tools.

In a nutshell:

• Money no longer reliably holds value → so work feels less meaningful.

• Elections reward outrage, not problem-solving → so polarization pays.

• Media rewards attention, not accuracy → so fear and conflict spread.

• Markets reward short-term gains → so long-term stability erodes.

• Institutions reward avoiding risk → so no one fixes root problems.

When all of this is true:

• Housing is unaffordable → so incentives reward speculation, not building.

• Healthcare is a maze → so complexity is profitable.

• Wages stagnate → so productivity gains don’t translate into shared value.

• Politics gets uglier → so conflict is profitable and consensus is not.

And everything else we care about doesn’t get solved.

None of this is about failures of character. They’re failures of design. Even good people produce bad outcomes under bad incentives.

So, What Exactly Needs Fixing First?

Let’s get back on board that bus metaphor for a moment. We have a few things to sort out.

1. We do need to lower the temperature, listen closer, and talk more civilly with each other or we’re never going to fix the bus or get much of anywhere.

2. We need to open the hood and take a look at the engine and the transmission and fix a few things to figure out why we keep stalling midway down the road—and probably replace a few parts with newer, better parts. (We also need to check the steering column and fix that, too.)

3. We need to look at the map again, update it, and make sure we’re all clear on where the roads are and what the rules are for driving on them, and can tell where we’re going and how.

4. We need better systems for picking who’s driving and who gets to give directions so we can better pick where we want to go, how to get there, and which roads to take—so the driver doesn’t offroad it, run red lights, or crash us into stuff while the ones giving directions just yell at the rest of the bus about it.

5. We need to make sure we make it so that the people giving directions and driving are more focused on driving and giving directions than on talking to the rest of us in the bus. It would also be good if we made sure the drivers don’t get to just ignore the ones giving directions and the traffic cops and the ones giving directions don’t just doodle on the map and bicker with each other.

6. Once we figure these things out, all that’s left is to implement the solutions.

But what does that mean?

1. We do need to understand each other, and that’s going to mean having those difficult conversations, listening intently to one another, speaking without contempt, and avoiding making assumptions about one another.

2. We need to carefully examine the effects of our economic systems (and social safety nets), and more than likely move to some version of a sound money system to prevent the economic ‘engine’ from overheating. We should also make sure that it’s ‘transmitting’ that energy smoothly, sustainably, and evenly throughout the economy. (We also need to have a look at how government ‘drives’ the economy and fix that too.)

3. We need to review, update, and re-establish the rule of law and transparency in how we execute policy; rules that apply equally, budgets and processes we can see.

4. We need better voting systems to choose who governs for us. That goes for the executive branch (our driver) as well as the legislative branch (the people we choose to give directions) to avoid executive overreach, constitutional crises, and erratic policy execution.

5. We need to ensure that when people are elected, the incentive structures reward making necessary but difficult decisions, reaching compromises, and governing smoothly and efficiently, rather than grandstanding, performing, and governing erratically.

6. Once we’ve found enduring solutions to these problems, all that’s left is to enact the solutions. Thankfully, our system of government lets us do that.

If we do these things, we can all get back to a smooth ride, talking amicably about where we want to go, and enjoying each other’s company on the way there—all while being able to trust and see that the drivers and direction-givers are getting us there safely and responsibly.

Where Do We Start?

If you’re reading this, you already have. The first step to solving any problem is recognizing it. Once that’s done, it’s time to talk. We need to listen to and understand one another before anything else. And then we need to forgive each other before we can move on. We have to make amends before we make amendments.

The rest of it? Well, that’s what we’re out here doing. That’s why I’m writing. And probably, that’s why you’re reading. (We’re not the only ones doing it, either.)

The Commonwealth Perspective is going to dive into these problems headfirst. ‘If our voting systems need fixing, what do we want them to do, and how do we fix them to do that?’ ‘If the rule of law is compromised, how do we restore it and fix it so that it’s fair and just?’ ‘How do we redesign our economy so that people don’t get left behind—and everyone still has skin in the game?’ ‘How do we improve the way we govern and incentivize politicians, legislators, and leaders to govern well and fairly?’ ‘How do we improve the way we make decisions?’

How Far We’ve Come

Some people say, ‘Play stupid games, win dumb prizes.’ Sometimes it feels like we’re doing that. To be really fair to ourselves—and our founders, imperfect though they were—the government, the economy, and the society we set up have done fairly well for about 200 years. We set democratic rules before ourselves and mostly stuck to them, updated them here and there, and added more players to the game. We grew to be prosperous and innovative and vibrant and diverse.

I think we get to pat ourselves on the back for that—but we should also have a look at fixing the rules. The ‘game’ of being this thriving and diverse democratic republic is definitely still worth playing.

We’re arguably still the most successful country on the planet. There’s a long way to go to be what we want to be, and nothing shameful in being critical of what we failed to be. There’s also nothing wrong or shameful in being proud of all that we are and all that we have accomplished.

The truth is that we’re all of these things. We should never forget our failings or our successes. We learn from our failures as well as our successes and we grow not just because of them, but by what we aspire to become. We are defined equally by all of them. It’s not only who we are, but all that we can be.

Where We Go From Here

Possibility is a defining part of our nature, our history, our myth, and our ethos. What we choose to be and to do, we can. When this country and its people have set our course to do something, we achieve. When we pull together, we drive real progress.

If we fix the incentives, the outcomes will follow.

That’s the work. It’s not glamorous. But it’s purposeful and necessary.

And we can do it, together.

Photo Credits:

Photo by Jen: https://www.pexels.com/photo/commuters-on-a-bus-2203416/

I’ve started and stopped writing this and other articles like it a dozen times. Partly because I want to say it perfectly. Partly because I want to have the solution already. And I don’t. But mostly because I’m not sure where this goes. But I know not trying and not publishing ideas isn’t the answer either. So, I’m writing anyway. Thinking out loud.

I’ve spent the last many years trying to figure out what’s going wrong—in our politics, in our governance, in our society, and in our economy. Talking to people across the ideological map. Researching problems and solutions. Figuring out blind spots. Sometimes convinced I’m right. Sometimes not. Sometimes partisan. Sometimes not. Sometimes angry or sad or frustrated or confused. Sometimes not.

But the whole time, I’ve been trying to understand why so many of us feel like something is coming undone, what is actually fraying, why those are, and what we can do about it. To understand what we feel and what we mean—and what we feel that we mean—when we get passionate and talk about fixing things. About breaking things. About restoring old things. About building new things.

I’ve learned a lot more from my curiosity than I have from my convictions. Slowly, that’s come to mean a few things. I don’t back down from what I’m convinced I’m right about, and one of the things I’m convinced I’m right about is that I can absolutely be wrong. And that means staying curious.

I can’t say I’ve really changed any of my fundamental principles, but I have grown to appreciate that the problems sometimes—oftentimes—look different from different angles. And that’s meant change in how I approach those problems.

Most crucially—and this is the bit where I always get hard pushback—I don’t think the problem is that we disagree. I really don’t. I think the problem is that the systems we rely on to handle disagreement aren’t working anymore.

Sure, anger and frustration are driving us towards confrontation. Temperatures and rhetoric are running high. Consequences are dire. Institutions are struggling to accommodate the breaking of norms and process as we struggle to get it right. Cultures of personality capture the limelight and feed a cycle—whether they mean to or not. Society is struggling to hold it together. Algorithms make it harder to hear each other. Technology and the economy are moving so fast it’s hard for everyone to keep up. Social norms are being disrupted quickly. Couple all of this with political messaging and a desire to do the right thing and people start to censor themselves—and each other—out of the equation. We grow disillusioned, contemptuous, or disengaged.

All of those are real problems. But they’re not the underlying problems. We didn’t really forget what those are. We just sort of stopped remembering how to talk to each other and stopped believing we could fix those things. We didn’t stop wanting to take care of each other. We just stopped remembering how to do that while taking care of ourselves and those who think like we do.

It doesn’t have to be like this.

If we dig deeper, it’s not even about people. It’s about the incentives we’ve created—knowingly or not—for the systems we work in. Why do we feel like we have to vote against the candidate we’re most afraid of so often? Why do we feel like we have to beat the other side or to stop them? Why do we feel like everything is fragile? Why do we feel like everything is urgent? Why do we feel like we have to move faster, faster, faster? Why do we sometimes feel like it still doesn’t matter?

Well, because we made things that way. Mostly—probably—not even on purpose.

We created a zero-sum voting system in a zero-sum counting system—especially for the presidency. Winner takes all. It sounds great. It sounds democratic. We should have somebody that wins based on having the most support. We should have a system to count the votes up nationally for representation. Whoever has the most support should be the person who represents us.

But this also means ‘loser takes nothing.’ So it’s easier to win by setting the stakes really high and scaring each other into thinking ‘we’ll lose everything’ if we lose anything at all. So we vote and govern to protect what we care about against the other. Candidates for president know the path to winning is not about individual votes but about electoral votes—so they spend more time where they can get them and less where they think they can’t. Voters can often only vote for one candidate (often only out of two options), so they choose who feels most honest and genuine, and prioritize the least unreasonable and least unlikable, instead of who they most want and most agree with. What’s actually on referendum isn’t so much about what we want these days, but what we don’t. That’s not stupid—it’s rational. Those are the incentives.

But it doesn’t have to be like this.

We created systems for running for office and governing based on popular support and popular funding and nomination from their own party. Makes sense—after all, we want people to be able to freely express their support. That’s free speech. We want people who will run for office and have to continually earn people’s support for that seat. Sounds great. We want people who will represent their party. That makes sense.

But the way we did it has also meant that everyone running for office has to constantly be raising money to outspend their opponents. They have to constantly be thinking about the next election to have enough time to get done what they intended to go do on behalf of their constituents. They have to constantly keep appealing to a small base of hyper-active voters in their own party to keep winning the nomination. And it’s not all the time. But it’s a lot of it. And that’s time not spent governing—it’s time spent doing what they need to to be able to get to the table to govern. It’s not stupid—it’s rational in the short term when it’s set up like that. Those are the incentives.

But it doesn’t have to be like this.

We created a roaring economy run on a dollar that’s worth more spent or borrowed than saved (fiat currency). We created a social safety net that’s built on never-ending growth. We founded businesses to do that—never-ending growth. More. More things, more money for shareholders, more products, more options, more features, more speed, more. Those aren’t bad things in and of themselves, as long as they have purpose. More can also mean more thought, more free time, more possibilities, and more opportunities.

But it does have a flaw—more is not always better. More spending means more debt. Growth without purpose is cancer. Speed without direction is chaos. We don’t lack frugality or purpose or direction—but we stopped incentivizing choosing things for those reasons. And it has all kinds of knock-on effects. Again—it’s not stupid to ‘buy-borrow-die’ in this system—it’s rational in the short term when it’s set up like that. Those are the incentives.

But it doesn’t have to be like this.

We created faster, smarter ways to communicate with each other and be more social even across great distances (social media). We found ways to connect far-flung communities of entrepreneurs and readers and fans and thinkers and doers and so much more. We found new ways to laugh, cry, pray, believe, love, and share with one another. So much of that is so good.

But it has also meant that we spent less of the long hours together. Less time present. Less time with people we don’t yet know or follow or subscribe to or understand or agree with. Fewer moments spent pondering without something to do. More time spent shocked, surprised, angry, and resentful about what someone did or said or thought. And that interaction is money. More time on the app. More ads. More audience. More likes. More shares. Slowly, it has become less about understanding, listening, and curiosity and more about being understood, heard, and liked. And that’s not stupid—it’s rational when that’s the way it works.

But it doesn’t have to be like this.

And with all of these systems and incentives, we made a game of over-promising and under-delivering. Over-promising on policy. Over-promising on income. Over-promising on prices, on taxes, on connection, on stability, on longevity. Not because any one person wants to. But that’s what it takes to play the game with the rules we set up. And eventually it catches up with us.

I don’t think we all really wanted to create these things like this. Not really. We wanted what we meant for these things to do, not what they actually do. Just like we mean the best for each other, even when what we actually do doesn’t work out that way.

And that’s one of the core reasons so many are angry, scared, confused, and contemptuous. ‘This was supposed to do X thing. I was (or it felt like I was) promised Y. And instead, I got Z.’ Like getting on a bus and paying your fare and getting dropped off a mile away from your destination. And that erodes trust, even if the intentions were good, the thinking sound at the time, and the morals in-tact. That’s why so many distrust institutions. And that makes sense.

We didn’t lose trust because we’re broken. We lost trust because the system we all created made promises it couldn’t keep.

And it doesn’t have to be like this.

Seeing each other clearly.

I’m a bit of a nerd sometimes, so I don’t mind telling you I have a favorite philosophical razor (sort of a ‘rule of thumb’). Most people know of Occam’s razor, which is usually shortened to “The simplest explanation is probably the right one.” Yeah, so that’s not my favorite—because simplest doesn’t mean the same thing to people, and simplest isn’t always right, especially when things are as complicated as they get in today’s world.

My favorite is Hanlon’s razor—or rather, my version of Hanlon’s razor. The original is something akin to:

"Never attribute to malice what can be explained by ignorance or stupidity.”

I much prefer:

“Never attribute to malice what can be explained by uninformed good intentions.”

Because most of us are just out here trying our best to do good in a complicated world. And that means a lot for our politics. Most—I’d even venture to say all Americans—just want the best for this country. We just come about it in different ways. And now that it’s harder to talk to and understand one another, we often don’t.

Think to your favorite funny reel or video of somebody mistakenly frustrating somebody when trying to help them, or those clips from The Taskmaster where they’re trying to shout and signal across the river to one another for charades. American politics is sorta like that. Now imagine both people are scared of the other person and think they have to beat the other one to help them both win.

Except that instead of two people, it’s around 334 million people, and the stakes are much higher than a spilled cup of coffee or gameshow. And not only do we often misunderstand one another, sometimes we really hurt one another, and often without meaning to. But really, we still want the best for each other and to take care of ourselves, together. It’s hard to remember that when politics feels like a fistfight on a sinking ship to get to the wheel—or the lifeboats.

But we can remember that, and we can do something about it. Because we’re not limited by gameshow rules or distance. We can listen to one another. We can seek solutions together. The distance is in our minds and how we see each other. The ship isn’t sinking, it’s just stuck.

Our problems are far more about how we disagree—the systems, the incentives, and the dialogue—than what we disagree about. If we get the incentives right, and build good systems from them and keep exchanging ideas, good people can govern, work, and live well — and if we get them wrong, even good people are forced into bad outcomes.

We could fix those if we tried.

We could.

What I’m doing about it.

For years, I was digging at these questions without fully seeing them. I think most of us have been. Then, when I started seeing them, I began digging at what to do about it. My inner dialogue was something like:

‘Do I even have to do anything about it? Should I do something about it? What should I do about it? Why should I be the one to do anything about it? I don’t even know what the answer is. I just feel like I have a better grasp of the problems now, and a few half-baked ideas on how to solve them. I’d better go learn more before I figure out what needs to be done and write about it.’

On a loop.

In many respects, to me, all of this feels like we’re all in a field, in the dark, mixed up, arguing about how to get home without any light as we stumble and trip and bump into each other. And I found a lamp, a compass, and what looks like the beginning of a trail.

So, for me, the answer is yes. I should do something about it, because I think I can, and I care about fixing this. I can’t not do something about it and keep caring—and complaining—about the outcome if I think I can help change it.

Just because I have a ‘lamp’ and a ‘compass’ doesn’t mean I know where to go and exactly how to get there. I’ve got some ideas. So this space is not for definitive answers. It’s for thinking in the open. For questioning incentives, institutions, and assumptions. For seeing if we can build trust without requiring agreement. For seeing if we can renew things that have tarnished. For growth with purpose. For presenting new ideas, challenging those ideas, and learning in the process. For suggesting solutions without demanding them.

Most of it won’t be nearly as introspective and reflective as this piece. Some of it will. Most of it is going to be exploring what’s broken and how to fix it well—in both technical terms and plain English. (And maybe Spanish, eventually.) I’m going to be writing on the edge of what I know and don’t—so I hope you’ll call me on it when I’m wrong. I’d much rather be proven wrong and learn from it than be mostly right and not know where it doesn’t work.

As the great Mark Twain said and my father often recalls to me:

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

And that applies as much to solutions as to what we know about each other. As the (oft-misattributed to Walt Whitman, but nonetheless true) saying goes:

“Be curious. Not judgmental.”

Need something about tackling big things? How about Jason Sudeikis (as Ted Lasso):

“Taking on a challenge is a lot like riding a horse, isn’t it? If you’re comfortable while you’re doing it, you’re probably doing it wrong.”

Or how about a blast from the past from Ms. Frizzle? (This one’s for my fellow millenials/zillenials):

“Take chances, make mistakes, get messy! […] Mistakes are stepping stones on the path to understanding.”

Figuring this out—together.

Really, all of this boils down to whether we want to want to fix this. Because we can.

So let’s go be uncertain and curious together, make some mistakes, ask more and better questions, and keep figuring this out.

The Commonwealth Perspective is my attempt to go do those things. If that sounds right to you, stick around. If it doesn’t, I hope you’ll challenge it. Either way, I’m here to learn—and I hope you’ll join me.

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What you can expect here, and what I ask of you.

Joining me here? Awesome. Let’s do this.

I won’t kid you. Some of this is going to get into the weeds. Like, deep into the weeds. I’m going to be exploring topics that involve theories of governance, economics, and politics, and social choice. We’re going to look at data and outcomes and charts and stuff. Real social science-y. I’m going to be talking principles, making assumptions, tearing up assumptions, asking questions, and looking for answers to questions I do and don’t yet know to ask.

I’ll try to translate jargon. It won’t always be perfect. So no shame; raise your hand and ask. Help answer someone else’s question. Teach me something I don’t know about what I’m learning. Challenge my thinking. Let’s keep this process going.

The only things I ask are to be respectful, courteous to one another, curious, and—the big one—learning to become comfortable with your discomfort and okay with disagreeing. Not resigned to disagree and stop talking to each other (or to me)—comfortable disagreeing. That’s where we all grow and learn from each other’s experiences and ideas.

That’s how we change our minds.

That’s how we renew ourselves.

That’s how we rebuild what’s broken.

I’ll leave you with a few more quotes (from some other other imperfect people you may know of) from which I’ve drawn inspiration from time to time. Tell me what resonates with you and what you think when you read them.

“How much more grievous are the consequences of anger than the causes of it.”
— Marcus Aurelius

“Nobody made a greater mistake than he who did nothing because he could do only a little.”
— Edmund Burke

“We have it in our power to begin the world over again.”
— Thomas Paine

“We should not look back unless it is to derive useful lessons from past errors, and for the purpose of profiting by dearly bought experience.”
— George Washington

“I am certainly not an advocate for frequent and untried changes in laws and constitutions. [...] Laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths disclosed, and manners and opinions change with the change of circumstances, institutions must advance also, and keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy, as civilized society to remain ever under the regimen of their barbarous ancestors.”
— Thomas Jefferson

“I don’t like that man. I must get to know him better.”
— Abraham Lincoln