Evolutionary Theory of Currency
Evolutionary Theory of Currency (ETC)

The Evolutionary Theory of Currency (ETC) is an economic framework for understanding the legitimacy, adoption, and success of currencies within the context of human biology. This essay will demonstrate that currency, like any commodity, derives its value from the worldview or (secular) religion that it is packaged with. The purpose of this essay is to explore the conceptual foundation, historical context, implications of ETC on monetary policy, and how genopolemology informs economics.

Notably, this essay concludes with an important prediction about cryptocurrency and proposes realistic actionable prescriptions of societal interest.

Conceptual Foundation of ETC

When we look at the currencies of the past and present, a clear pattern emerges. Currency issuers always package their currency with a monetary theory. These theories provide economic arguments and justifications for the nature of their respective currency, as well as their monetary policy. All of these issuers, without fail, assert the truthfulness of their monetary ideology. Given that these theories are in opposition with one another, they cannot all be correct. At best, only one of them could be the “right theory”. Yet, currencies with the “wrong theory” evidently had value given their legitimacy, adoption, and use.

Immediately, a self-evident observation can be made: the validity of a monetary ideology is irrelevant to the value of currency. Otherwise, we would have observed that currencies with the “wrong theory” would not have been legitimized, adopted, and used. All currently existing monetary ideologies, including the one professed by modern economic theory, ascribe the causality of monetary value to arguments and justifications found within their internal model. Yet, none of these theories can account for the value of “unsound” currencies, other than to invoke the tired-old god-of-the-gaps excuse of human irrationality that is incessantly used in the field of economics. In other words, all existing monetary ideologies explain the value of unsound currencies with the following logic: “currencies based on my ideology are sound, all others are thus unsound, and, therefore, all other currencies are a bubble of human irrationality just waiting to collapse”.

Here, genopolemology introduces ETC to the field of economics – a new monetary theory that not only congrues with the prevailing mainstream theory, but is more informative and predictive. Unlike modern economic theory’s model of currency, ETC’s model has no exceptions to it and thus needs not invoke bubbles or irrationality to explain them away. The principles of ETC are as follows:

  • genes create memes;
  • memes are genetic weaponry in male-male competition (see Social Antler Theory);
  • memes comprise worldview, religion, culture, and art (collectively, “worldview”);
  • worldview is a social antler;
  • currency is legitimized by worldview;
  • currency is a tool of male-male competition.

When we look at gold (or the gold standard), fiat money, or bitcoin, they each come with different theoretic arguments for their value. ETC holds that these arguments comprise a worldview and all worldviews are made by brains made by genes. Thus, every monetary ideology is a phenotype and the use or acquisition of that currency is a signal of religious adherence. As demonstrated, the truthfulness of a theoretic argument behind the legitimacy of any particular money is irrelevant to its successful adoption. By process of deduction, the only other variable which accounts for the value of currency is the mere existence of its ideology and that it has adherents. In other words, the value of currency is a matter of confidence and not the theory itself.

This does not, in any way, contradict the claims of modern economic theory. As the more cardinal theory, ETC reinforces it and this will be discussed in further depth.

Historical Analysis & Case Studies

As we shall see, every failure or exception of past monetary ideologies default back to ETC.

Gold & Gold-Backed Currency

Monetary Theory: Gold has historically been used as money due to its intrinsic qualities: it’s scarce, durable, divisible, and has been universally recognized as valuable. Gold-backed money refers to a currency that is directly convertible into a fixed amount of gold. Under this system, the value of the currency is directly tied to the value of gold reserves, theoretically ensuring stability in the money’s purchasing power. The gold standard, where currencies were directly pegged to gold, aimed to provide a stable monetary environment by limiting inflation and promoting international trade balance. The theory holds that because the supply of gold is limited and difficult to extract, it naturally controls the expansion of money supply, thereby maintaining price stability.

Pitfalls of Gold: physical gold is impractical and inconvenient. Moreover, when economic growth outpaces the supply growth of gold, it results in deflation and economic instability. These pitfalls did not stop the historical adoption of gold as a currency. Despite its merits, the monetary ideology of gold was nevertheless invalid. Therefore, its adoption had absolutely no causal link with its theory’s internal model. Instead, it was adopted merely because it had a theory and its theory had proponents.

Pitfalls of the Gold Standard: By tying the money supply to gold reserves, countries are limited in their ability to conduct monetary policy which can exacerbate economic downturns due to the inability to expand the money supply past a certain point. While gold is, in the long run, involatile relative to other commodities, it is nevertheless subject to short term fluctuations which make it less stable relative to fiat currency. Furthermore, countries with trade imbalances risk economic instability. Under this system, countries with trade surpluses increase their gold supply and thus expand their money supply; this could acceleration inflation. Conversely, countries with trade deficits decrease their gold supply and thus their money supply; this can decelerate inflation or even risk deflation while contracting the economy. Regardless, the invalidity of the gold standard ideology did not preclude its adoption. Therefore, the theory’s internal model had no cause in its adoption, but the existence of the theory itself (and its adherents) did.

Fiat Money

Per Modern Economics

Monetary Theory: Modern economic theory views fiat money as currency that has value not because it’s backed by a physical commodity (like gold), but because it is issued by a government and accepted by citizens and businesses for transactions. Its value comes from the trust and confidence that people have in the currency’s ability to serve as a medium of exchange, a unit of account, and a store of value. Fiat money allows central banks more control over the economy through monetary policy—manipulating interest rates and money supply to influence economic conditions, such as inflation, employment, and growth. The theory emphasizes the importance of government regulation and monetary policy in maintaining the value of fiat money.

Pitfalls of Modern Economic Theory: While the justifications provided are mostly accurate, they do not establish an ultimate cause. Specifically, what is it about government issuance that gives legitimacy to a currency? Modern economic theory has no answer. Even if we accept the claim as is, legitimacy (based on those considerations) is in the eye of the adherent who is an elite minority; this cannot explain its widespread adoption. The vast majority of the citizenry does not comprise individuals who consciously determine to use a particular currency for its monetary policy or government-backed status. Even with fiat money, we have a monetary ideology that fails to justify itself, even though its individual claims are largely true. In this case, fiat money is legitimized by virtue of its association with the brand of the issuer, i.e. its worldview. As such, ETC is the more cardinal superset of modern economic theory.

If modern economic theory’s view of currency was the full explanation, how does it explain cryptocurrency? It cannot other than to say that it is a bubble of human irrationality and / or an elaborate Ponzi scheme. As we shall see, ETC can explain cryptocurrency without invoking that god-of-the-gaps argument.

Per Chartalism

Monetary Theory: Chartalism is a monetary theory that views money primarily as a creature of the state. According to chartalism, the value of money is given by the state’s power to impose taxes and demand that those taxes be paid in the currency it issues. Essentially, money has value because a heavily armed government decreed it to be so. Chartalism prescribes the free issuance of currency to meet the spending needs of the economy, focusing on achieving policy goals such as full employment and social welfare rather than balancing budgets, with the only limit on issuance being inflation. Here, we see that chartalism is also congruent with ETC, given that the threat of state violence is part of the currency’s worldview.

Pitfalls of Chartalism: Whereas chartalism answers the question of why government backing legitimizes currency, it fails to account for deductions at source (which is the default method of salaried income taxation), and it fails to account for the various value-added taxes. Once taxes are already paid, there is no longer a need to trade time and labor for the government’s currency. Past that point, chartalism is an inapplicable explanation for the value of currency whereas modern economic theory’s brand legitimacy explains it. Either way, we default back to ETC.

Bitcoin / Cryptocurrencies

Note: the following does not apply to the Noble Dollar, as it is the only cryptocurrency that is not legitimized by the crypto ideology described below. Instead, it is the only cryptocurrency that aligns with modern economic theory and ETC.

Monetary Theory: Bitcoin and other cryptocurrencies represent a digital or virtual form of money that uses cryptography for secure transactions, control the creation of additional units, and verify the transfer of assets. Unlike fiat money, cryptocurrencies operate on a decentralized network using blockchain technology. The monetary theory behind cryptocurrencies like Bitcoin suggests that they can act as an alternative to traditional currencies and financial systems. Their value is derived from their scarcity (Bitcoin, for example, has a cap of 21 million coins that can ever be mined), the energy and computational power required to mine new coins, and the growing acceptance of digital currencies for payments and as an investment. Cryptocurrencies challenge traditional monetary theories by offering a system that is not controlled by any single authority and is (ostensibly) resistant to censorship, inflation, and manipulation.

Pitfalls of Bitcoin / Crypto: Here, we have an egregious detachment from reality. Cryptos are incredibly volatile, are neither backed nor obligated by a government, offer no tools for monetary policy or economic stability, are not accepted as payment other than by a fringe minority of its ideology’s adherents, and has been used to finance criminal and terrorist activity. Here, it is evident that cryptocurrency’s ideology is populist and its adherents are societal (and often political) dissidents. Objectively, society has only been made worse off by the existence of cryptocurrencies (at least, as they exist in their current form). The Noble Dollar is the only exception to this rule.

Implications for Monetary Policy

Worldview is a genetic weapon used in male-male competition and a mating call. As such, it fosters the replication of the genes that create it, as well as copies of those genes found in other humans, i.e. kin selection. In turn, the more genetically related a people are to the originators of a worldview, the greater the incentive to adhere to it and promote it. Thus, money selects for types of humans who are genetically similar to those who created it.

This has implications for monetary policy in the following way: money which is legitimized by a worldview that is inconducive to civilizational ends is destructive to society. On this basis alone, any currency that is legitimized by an anti-social, populist, or anti-elitist worldview merits being destroyed. While the monetary ideologies of governments are either false or incompletely explanatory, they are ultimately well-intended. However, this is absolutely not the case for standard cryptocurrencies whose sole purpose is towards anti-social ends. Except for the Noble Dollar, the monetary ideologies of cryptocurrencies only serve to empower the worst of humanity.

Prediction: Given that cryptocurrencies have a monetary ideology and that the ideology has adherents, it will continue to have value and possibly become more adopted as more and more commoners become disgruntled with the system. In addition, their supply is even more limited than gold, given that they have a hard limit on their supply. This ensures that, at minimum, a growing amount of fiat money will be chasing fewer units of cryptocurrency. This market fundamental does not support the idea of a future collapse in price. To the contrary, the onus is on the state-bearing members of society to destroy them.

Prescription: In the interest of a more prosperous society, monetary ideology should empower and favor the selection of the culture creators and state-bearing members of society, i.e. the elite. Government-backed currencies fail in this regard, whereas the Noble Dollar fulfills this requirement. By providing a healthy alternative, it is an excellent solution to the destructive problem of standard cryptocurrencies. Moreover, the Noble Dollar promotes the evolutionary interests of a higher human type.

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Conceptual Open-Source License (COSL)

The original ideas and arguments presented herein are published under the COSL license.