History is littered with monetary schemes that were started for altruistic reasons. Bitcoin will be no different. The eventual outcome will be enriching the earlier owners of Bitcoin at the expense of the later owners. If you have studied monetary history at all what comes to mind is the Mississippi Bubble of John Law. In France in the early 1700’s the King had died and left the Thrown to a 12 year old. The Duke of Orleans was left to figure a financial mess for the new 12 year old King. With taxes just enough to cover spending and nothing to repay the massive debt, The King was not the only thing being buried in France, the people could not carry the load any longer. Money was becoming scarce as it was being horded from the threat of the future tax burden, and from the threat of a recall to deprecate the content. Along comes John Law with a scheme to create a paper monetary system called a land bank and almost overnight transformed the economy with this new medium of exchange. The French owned vast amounts of land in the new world west of the Mississippi and a company was formed to take advantage of that. In order to invest in the new company you had to exchange the debt of the King along with new paper money created by John Law, the frenzy was on. Until one day someone asked for a return of their investment and they wanted gold as promised….game over. Study John Law and the Mississippi Bubble….fascinating story.
Charles Kindleberger, an economic historian at Yale University, believes Law’s intentions were legitimate and that the Mississippi Company was intended to be a real enterprise.