History demonstrates, the greatest danger to our community is the central banking system which uses all manners of deception in order get control of all commodities by tokenizing them and gradually converting the tokens to fiat where they can be stolen at will under full protection of the law.
It seems to me that Ethereum is already under the control of the central banks and Bitcoin is likely to fall soon as BlackRock and others pursue their Bitcoin ETFs.
To protect Cardano from the central banks I have written down some ideas for our constitution.
They are repeated below for convenience, but the latest list will be found at this link.
Constitutional Issues
- Decentralization Alone Canāt Stop Cardano Governance From Becoming Like The Central Banks.
- Constitutional Amendments Required:
- The Free Market Will Determine The Price Of ADA
- The price of ADA will not be set in relation to any other commodity nor any other currency by any authority.
- No Oracles Will Be Used To Decide Any Governance Issues
- Community members are responsible for determining what is true and expressing it with solicitations, debate, votes, and delegation
- The free market will determine prices - not oracles
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Constitutional Committee members will be compensated with ADA and will agree to hold only ADA in their portfolio and no other assets of any kind.
- This helps ensure that the incentives of the Constitutional Committee are in alignment with their responsibility of adding utility and value to the protocol.
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ADA To Be The Only Form Of Currency Accepted Into The Treasury
- No receipt money shall be accepted into the treasury:
- Receipt money means you get a receipt for a commodity being held somewhere presumed to be safe
- History shows that all banks will eventually succumb to the temptation of lending out the commodity backing the receipt, either in secret or publicly as fractional reserve banking.
- This started in the middle ages when goldsmiths would hold gold in their safe for customers and provide a receipt which could be redeemed for the gold. Eventually the receipt became accepted as payment for commodities. But the goldsmiths would always lend out the gold to gain interest without telling the owners and would eventually default when the community discovered, leaving the customers with nothing. The most recent example of commodity-backed money was the US dollar which up until 1933 could be redeemed for gold at at $20.67 per troy ounce. Then it transitioned to fractional money when the price was changed to $35 per ounce in 1934, effectively reducing the value of the dollar by almost 41%. Then it transitioned to fiat money in 1971 - not redeemable for anything, but which citizens are required by law to accept. This is not the exception, this is the absolute rule. All commodity-backed money is a commodity in transition to fiat money. My understanding is that history has no exceptions to this rule. This information comes from The Creature From Jekyll Island.pdf. The transition may take several years but history shows that commodity-backed money always transitions to fiat money eventually. This has been going on since the middle ages and we now stand in a place where we can stop it.
- No Stable Coins shall be accepted into the treasury
- Stablecoins are just commodity or fiat backed overcollateralized receipt money in a new slick package. We have all seen what happens to stablecoins. Worse, all stablecoins that I know of are centralized money and require an oracle to function. So if spending requires using a stablecoin then the exchange must occur at the point of sale. Forbidding centralized currency forbids stablecoins and receipt money and commodity-backed and overcollateralized money. But we should forbid these explicitly. One thing we can not do is accept commodity-backed and overcollateralized money and stablecoins and then forbid centralized money because this is a contradiction - these are all centralized money.
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No Algorithmic Stable Coins shall be accepted into the treasury
- With Djed for example, we hear from Shahaf Bar-Geffen who is the COTI CEO that Djed may be collateralized with a basket of different coins not just ADA. Another coin called Shen is already used in the process. I canāt find much out about Shen - I donāt know if it is a blockchain or a DAG like COTI. Further more, Djed is pegged to the dollar. So if you put $20 ADA in to the contract then you get $20 of Djed minus a fee for the exchange. When you want to cash out then you give your Djed back and get your $20 dollars worth of ADA back minus fees again. But what about inflation? Your $20 minus the fees is worth less because of inflation. So you suffer a loss because the dollar will be worth less when you go to get your ADA back. And if the dollar tanks then you are really in bad shape. Another concern is that Coti was associated with Ardana, and we all know how that went. Seems like the only reason to hold Djed in the Cardano treasury is if you think the price of ADA is going to fall. Does Cardano want to bet against itself? Reminds me of The Big Short. With all these questions about Djed and with all the bad history we have with stable coins it seems we should explicitly forbid holding them in the treasury.
- Nothing that has physical existence such as buildings, land, equipment, timber, or gold shall be accepted into the treasury
- Physical things can be confiscated or associated with a country or a government.
- Right now in the news we are seeing that Binance is surviving Choke Point 2 because Binance has no physical offices.
- No Central Bank Digital Currencies shall be accepted into the treasury as these can be disappeared by the issuing authority.
- No digital commodities other than ADA will be accepted into the treasury
- Receipt money, commodity-backed money, overcollateralized money, fiat money, fractional money, stable coins, algorithmic stable coins and CBDCs. That leaves only digital commodities like Bitcoin and ADA. But holding Bitcoin is betting that it will surpass ADA in value. Itās betting against our own project.
- No digital commodities from within the Cardano ecosystem other than ADA will be accepted into the treasury - No other tokens and no NFTs
- So the only money left standing is ADA, NFTs and perhaps Midnight when that arrives.
ADA is preferable to Midnight because ADA is completely transparent which is very good for governance. - History has shown that when a treasury holds more than one commodity (gold and silver) in the treasury it was difficult to establish a fixed price ratio between the two metals. This problem is known as the bimetallic standard problem. The problem arose because the relative values of gold and silver fluctuated over time, depending on supply and demand factors. The problem with the bimetallic standard was eventually resolved with the adoption of the gold standard, which established gold as the sole standard for currency. This made it easier to maintain a stable value for the currency and reduced the risk of currency fluctuations. We should remember this lesson from history and only accept ADA into the treasury - not NFTs nor anything else except ADA.
- So the only money left standing is ADA, NFTs and perhaps Midnight when that arrives.
- There are times when Cardano governance will need to handle currencies other than ADA. For instance, we are required by law to accept fiat money like US dollars. But all currencies must be converted to ADA immediately upon receipt before going into the treasury. If spending requires using anything other than ADA then the exchange must occur at the point of sale. The whole point of ADA is to end slavery to the central banks. We must not give the banks a backdoor into our economy. We must not allow any form of money into the Cardano treasury except ADA.
- Why so explicit on only allowing ADA into the treasury:
If we are not explicit that only ADA is to be accepted into the treasury and if we donāt explain why then future generations who have forgotten the horrors caused by other forms of money will allow them into the Cardano treasury.
- No receipt money shall be accepted into the treasury:
- Treasury Will Never Engage In Borrowing Or Lending Of Any Kind
- No lending using promissory notes. This should be impossible if payments and donations are only made in ADA but should be explicitly stated so there is never a temptation to lend with promissory notes. Same as saying no double spending but banks make their money by double spending (Fractional Reserve Banking).
- The treasury shall only receive ADA from protocol services such as staking fees and transactions fees. It will never borrow.
- The treasury will only disperse ADA to make donations or to purchase services for the community in transactions which are ratified in governance elections.
- Why Prohibit Cardano Governance From Borrowing and Lending:
Big Bank engages in predatory lending at the nation state level.
This is how they enslave poor countries and poor people.
Lets protect the Cardano nation from both becoming the prey or becoming the predator: - Why so explicit about never engaging in borrowing and lending?
- The power to print fiat money was never explicitly granted to the federal government in the Constitution. In fact the authors voted against granting that power. Sadly they never specifically prohibited fiat money. So the power to print fiat money was reserved for the states or the people by the Tenth amendment. But of course the federal government does it anyway. The back door was Article I, Section 8, Clause 2 which reads as follows: āThe Congress shall have Power Toā¦ borrow Money on the credit of the United States.ā Because you have to issue a note to acknowledge the debt, this opened the door for fiat money. The courts have upheld this interpretation.
- So it is not enough to not grant a power - some powers must be explicitly revoked.
- Explicitly recognize in the constitution that governments are complex adaptive systems that will learn to create the very problems they were instantiated to solve if money or benefits dispersed are allowed to feedback into the government agencies from which these originate.
- This is discussed in detail on our own Cardano governance forum at this link here.
The software to run Cardano governance is a complex system. But the Cardano governance as it helps the community manage itself is a Complex Adaptive System. Complex Adaptive Systems are living, learning, feeding, growing, evolving things. The United States Bank/Government is a Complex Adaptive system which learned to create the very problems it was built to solve in order to feed and grow. This is why we have never ending financial crises and never ending war. Voltaire now makes the Cardano Complex Adaptive System a Bank/Government too. It is a new living thing. It doesnāt have to grow up learning to create the very problems it was built to solve like the US Bank/Government did.
Bee colonies store honey and make decisions in democratic elections. They are simple Bank/Governments and they are Complex Adaptive Systems too. But Bee Democracy has evolved structure and feedback mechanisms which prevent bee government from learning to create the problems it evolved to solve. The Bee Democracy structure enforces that bee politicians must earn delegation through honest debate on every proposal using information they verify for themselves.
The Human Democracy structure enforces that politicians earn delegation once by saying what they are told to say and then exploit this power for the rest of their careers.
- This is discussed in detail on our own Cardano governance forum at this link here.
- The Free Market Will Determine The Price Of ADA
- Supporting Documentation on constitutional issues
- There must be a link from Cardano Constitution to the following document so that future generations will remember the horrors of fiat money and the central banks and never permit their return
- The Creature From Jekyll Island
- Constitutional Amendments Required:
