For the War. (Any views expressed in the below are… | by Arthur Hayes | Sep, 2022

Just to hammer home the seriousness of this current conflict, my macro daddy Felix posted this distressing chart of the past major conflicts between the established hegemon(s) and up-and-coming challengers.

When war is waged, the State takes priority. Regardless of whatever the pre-war legal norms were, during wartime, whatever the State needs, the State takes. And because the State must have what it needs to wage war, the private sector is typically crowded out of a wide range of goods and services.

The flag that can marshal the most of its citizens’ resources and put them towards fighting the war is the flag that will win. The government must take control of these private resources in either physical form (i.e., food, machinery, labour) or in abstracted form (i.e., currency in circulation, financial assets like stocks, bonds, etc.). The physical route is more obvious and mentally disruptive. Imagine a government goon knocking on your door and demanding all the food in your kitchen to feed hungry soldiers, or that you work 8 hours each day in a converted factory building munitions for below market wages. That makes war very real to the average citizen.

Overt Capital Controls

Overt capital controls directly restrict the movement of money between borders and currencies. The end result is a pool of vulnerable capital that can be easily channelled to “patriotic” purposes.

Financial Repression

Turning back to WWII, the flags have now implemented capital controls and their domestic capital is stuck inside the border, with limited investment options available to their plebes. What did they do next in order to capture its citizens’ landlocked capital and redirect it towards the war effort? They happily offered debt obligations to their patriots to help fund the fighting. Where I could, I tried to compile a numerical representation of the real yield of various “war bonds” or other government bonds that were issued during and after the war.

I Gotta Eat

I will now walk through the last major form of economic control wielded by governments during wartime — food rationing — and the impact it had on prices and citizen’s wages during WWII. Before I jump in, I should note that the food rationing situation in a WWIII scenario likely won’t be apples to apples with what took place during WWII. I think we’re more likely to see food shortages than direct food rationing (and I’ll share more on why a bit later in this section). But, I expect the price impact and cultural effects of the food shortages will be similar — so it’s still useful to review what happened with food rationing during that period. Let’s take a look.

Bitcoin’s Intrinsic Value

At any point in time, there is no mathematical way to prove that a particular public Bitcoin address belongs to me, or that I’m able to spend the Bitcoin contained in that address. Only when I sign a message spending an output of Bitcoin can it be reasonably determined that I had access to that address at that specific date and time. This is revolutionary, and not fully appreciated by most.

How Bitcoin Would Survive


American War Bonds

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